The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) held that the Tax Deducted at Source (TDS) deducted in the hands of the transferor company shall belong to the transferrer company when the amalgamation scheme is approved by the High Court.
The scheme of amalgamation between M/s. Bansidhar Commotrade Pvt. Ltd., M/s. Basudev Commosales Pvt. Ltd., M/s. Kanha Vincom Pvt. Ltd., M/s. Lilac Merchandise Pvt. Ltd., M/s. Mahajogi Vinimay Pvt. Ltd., M/s. Narmoda Commercial Pvt. Ltd., M/s. Pushkara Commosales Pvt. Ltd., M/s. Sponsor Tracom Pvt. Ltd. with the assessee i.e. M/s. Popular Complex Advisory Pvt. Ltd. was approved on 20.01.2022 w.e.f. the appointed date i.e. 01.10.2020 under Section 233 of the Companies Act, 2013.
The assessee claimed the credit of TDS to the tune of Rs. 3,31,880/- in its return of income filed for the relevant assessment year which originally belonged to the merged entities namely M/s. Kanha Vincom Pvt. Ltd., M/s. Lilac Merchandise Pvt. Ltd., M/s. Narmoda Commercial Pvt. Ltd. and M/s. Pushkara Commosales Pvt. Ltd. prior to amalgamation with effect from 01.10.2020. Return of income was filed on 15.03.2022 wherein the above said TDS credit was claimed.
The Assessing Officer denied the claim of TDS credit and determined the liability of the assessee at Rs. 3,49,580/- after charging interest under Section 234B of the Income Tax Act of Rs. 35,832/- and under Section 234C of the Income Tax Act of Rs. 15,080/- alleging the mismatch of TDS claimed in the Income Tax Return and as appearing in Form 26AS.
In the case of Marshall Sons & Co. (India) Ltd. Vs. ITO reported in 223 ITR 809 the Apex Court held that every scheme of amalgamation has to necessarily provide a date with effect from which the amalgamation/transfer shall take place and it is true that while sanctioning the scheme, it is open to the Court to modify the said date and prescribe such date of amalgamation/transfer as it thinks appropriate in the facts and circumstances of the case.
However, if the Court so specifies a date, there is little doubt that such date would be the date of amalgamation/date of transfer. But, where the Court does not prescribe any specific date but merely sanctions the scheme presented to it, it should follow that the date of amalgamation/date of transfer is the date specified in the scheme as the transfer date and it cannot be otherwise.
The Two-member bench comprising of Rajesh Kumar (Accountant member) and Sonjoy Sarma (Judicial member) examined the Form 26AS of the amalgamating companies and found that TDS is deducted in the name of transferee companies but that is immaterial when the scheme is approved by the High Court as post the appointed date, the TDS deducted in the hands of the transferor company shall belong to the transferee company.
Therefore, the order of the Commissioner of Income Tax (Appeal) [CIT(A)] was set aside and the Assessing Officer was directed to allow the credit of Rs, 3,31,880/- to the assessee. Thus, the appeal of the assessee was allowed.
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