DEEPSHIKHA TRADING COMPANY PVT. LTD.,KOLKATA vs. I.T.O., WARD - 6(2), KOLKATA

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Ld.
Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as “the Ld. CIT(A)”] passed u/s 250 of the Income Tax Act,
1961 (hereinafter referred to as “the Act”) for AY 2018-19 dated
31.07.2024, which has been passed against the assessment order u/s 143(3)/143(3A)/143(3B) of the Act, dated 12.02.2021. I.T.A. No.: 1957/KOL/2024
Assessment Year: 2018-19
Deepshikha Trading Company Pvt. Ltd.
Page 2 of 8

amalgamated entity is eligible for the pre-paid tax credit of the amalgamating entity.
8. For that on the facts, and in the circumstances of the case and in law, the Ld. CIT(A) erred in not granting TDS credit and Advance Tax of Rs. 1,23,331
and Rs. 1,75,000 respectively, which was claimed by the appellant in the return on the ground that the said TDS credit and Advance Tax is duly appearing in Form 26AS of the amalgamating company (GMB Investments
Private Limited) which got amalgamated with the appellant during the year under consideration pursuant to the order of the NCLT, Kolkata Bench vide order dated 19.3.2018 in CP(CAA) No. 736/KB/2017. 9. For that on the facts, and in the circumstance of the case and in law, the Ld. CIT(A) erred on the facts and in law in not appreciating that the income corresponding to the above stated TDS credit and Advance Tax claimed has been credited in the Accounts of the appellant for the year under consideration and considered for tax in the income tax return filed by the appellant.
10. For that the appellant craves leave to amend, add, delete, replace, alter, vary or withdraw any or all the grounds of appeal either during the course of hearing or at any time before hearing of this appeal.”
2.1. The assessee has taken as many as 10 grounds of appeal but in effect they are against not granting the TDS credit of Rs. 1,23,331/- and Advance Tax of Rs. 1,75,000/- pertaining to the amalgamating company as per the order passed by the Faceless Assessment Centre u/s 143(3) read with Section 143(3A) and 143(3B) of the Act.
3. Rival contentions were heard and the documents and the paper book filed have been examined. The brief facts of the case are that the assessee filed the return of income on 30.09.2018 showing total income of Rs. 16,92,420/- and the case was selected for scrutiny under CASS with the reasons being ‘amalgamation or demerger during the year’ and ‘large any other amount allowable as deduction claimed in Schedule BP of return’. Notice u/s 143(2) of the Act was issued and the assessee furnished the reply and after considering the reply, the income declared at Rs. 16,92,420/- was accepted in the order u/s 143(3) of the Act.
I.T.A. No.: 1957/KOL/2024
Assessment Year: 2018-19
Deepshikha Trading Company Pvt. Ltd.
Page 4 of 8

However, neither in the initial intimation issued u/s 143(1) of the Act nor in the computation sheet forming part of the order u/s 143(3) of the Act, the credit for TDS and advance tax of Rs. 1,23,331/- and Rs.
1,75,000/- respectively pertaining to the amalgamating company was allowed. Aggrieved with the non-allowance of the two credits, the assessee filed the appeal before the Ld. CIT(A). As mentioned in para 3.0
of the order of the Ld. CIT(A), there was amalgamation of M/s. GMB
Investments Pvt. Ltd. with the assessee i.e. Deepshikha Trading
Company Pvt. Ltd. in FY 2017-18 relevant for the AY 2018-19. The assessee filed the return of income after the merger for the assessment year 2018-19 on 30.09.2018 showing total income of Rs. 16,92,420/-.
In the appeal filed before the Ld. CIT(A), the assessee contested that the Ld. AO erred on the facts and in law in not allowing credit of TDS and Advance Tax for Rs. 1,23,331/- and Rs. 1,75,000/- respectively in the assessment order dated 12.02.2021 passed u/s 143(3) of the Act. In ground no. (1)(b) it was claimed that above TDS credit and Advance Tax credit was duly appearing in Form 26AS of GMB Investments Pvt. Ltd., being the amalgamating company, which got amalgamated with the appellant during the FY 2017-18 pursuant to the order of the National
Company Law Tribunal (NCLT), Kolkata Bench vide order dated
19.3.2018 in CP(CAA) NO.736/KB/2017 and that the said TDS credit and Advance Tax have neither been claimed by nor refunded to the amalgamating company, GMB Investments Pvt. Ltd. In ground no. (1)(c), it was raised that the income corresponding to the above TDS credit and Advance Tax claimed has been credited in the Accounts of the appellant for the year under consideration and considered for taxation in the return filed by the appellant. The consequent ground of short allowance of interest u/s 244A of the Act on the refund arising was also raised.
I.T.A. No.: 1957/KOL/2024
Assessment Year: 2018-19
Deepshikha Trading Company Pvt. Ltd.
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The Ld. CIT(A) perused the assessment order and the submission of the assessee but treated the order u/s 143(3) of the Act as infructuous and dismissed the appeal. The relevant finding from the order of the Ld.
CIT(A) is as under:
“5.0 As evident from the facts above, there was an amalgamation of two entities viz., Deepshikha Trading Company Private Limited amalgamated company / transferee company) and M/s GMB Investments Private Limited
(amalgamating company / transferor company. Post merger, the assessee filed the return of income of the merged entity and claimed the credit for prepaid taxes i.e. TDS of Rs. 1,23,331 and Advance Tax of Rs. 1,75,000
appearing in Form 26AS of M/s GMB Investments Pvt. Ltd. (amalgamating company). The CPC did not allow the credit in the intimation u/s 143(1).
Neither was the credit allowed in the rectification order passed subsequently u/s 154. The case in the meanwhile was selected for scrutiny and the AO passed the impugned order u/s 143(3) accepting the returned income but without giving the credit for pre-paid taxes of M/s GMB
Investments Private Limited (amalgamating company).
In the appellate proceedings, the assessee pleaded to allow the tax credit. I have considered the facts of the case and the submission of the assessee.
To begin with, there is no dispute that amalgamated entity is eligible for the prepaid tax credit of the amalgamating company. But the initial denial of the credit was in the summary assessment u/s 143(1) which is an appealable order u/s 246A. There is no discussion and adjudication of this issue in the order u/s 143(3). Hence, the cause of action for the assessee arises against the intimation u/s 143(1) and not against the impugned order. The Tribunal confirmed this view while dealing with a similar matter in the case of Areca
Trust ITA No. 433/Bang/2023 dt 26.07.2023. it is relevant here to note that CPC Tunder identical conditions, denied the pre-paid tax credit to assessee in the intimation u/s 143(1) for the subsequent AY 2019-20. The assessee assailed the intimation and the first appellate authority allowed the appeal in favour of the assessee. Therefore, the present appeal against the order u/s 143(3) is treated as infructuous and dismissed.”
3.1. We have considered the rival contentions while the Ld. DR relied upon the order of the Ld. CIT(A). Ld. AR submitted that the rectification applications dated 20.05.2022 and 15.01.2024 filed u/s 154 of the Act against the assessment order u/s 143(3) of the Act are pending. An application dated 25.07.2019 u/s 154 of the Act was also filed before
I.T.A. No.: 1957/KOL/2024
Assessment Year: 2018-19
Deepshikha Trading Company Pvt. Ltd.
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the CPC against the intimation order against u/s 143(1) of the Act which was rejected vide order u/s 154 of the Act dated 27.09.2019. 3.2. We have gone through the submissions made. The assessee contends that the income in respect of which TDS was deducted and advance tax was paid has been shown in the return of AY 2018-19 in the case of the amalgamated company under the provisions of sub-
Section (1) to Section 199 of the Act. Any deduction made in accordance with the foregoing provisions of the Chapter relating to TDS and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security, or of the depositor or of the owner of property or of the unit-holder, or of the shareholder, as the case may be. As per
Section 198 of the Act, the tax deducted is income received for the purpose of computing the income of an assessee. Since the income on which TDS was made was included in the income shown by the amalgamated company and the advance tax was paid on the income of the amalgamating company which income after amalgamation had been included in the income of the amalgamated company, therefore, the view of the Ld. CIT(A) that the credit was not to be allowed as the assessee ought to have appealed against the intimation u/s 143(1) of the Act is not correct. Since the income of the amalgamating company had been included in the income of the amalgamated company as per the provisions of Section 199(1) of the Act read with Section 198 of the Act, the credit for the TDS made in respect of the income of the amalgamating company which was shown in the hands of the amalgamated company ought to have been allowed to the amalgamated company. Since the amalgamating company is no longer in existence and all the assets and liabilities by virtue of the order of the NCLT were I.T.A. No.: 1957/KOL/2024
Assessment Year: 2018-19
Deepshikha Trading Company Pvt. Ltd.
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taken over by the amalgamated company, even the credit for TDS and advance tax had to be allowed to the amalgamated company. The assessee was claiming only a credit for the tax paid and neither in the intimation u/s 143(1) of the Act nor in the assessment order u/s 143(3) of the Act any addition was made and only the credit for TDS and advance tax was being made, therefore, the same ought to have been allowed in the hands of the person in whose case the income of the earlier entity was finally assessed. Hence, the grounds of appeal in respect of credit for TDS and Advance Tax are allowed and the order of the Ld. CIT(A) is set aside and the Ld. AO is directed to allow credit of Rs. 1,23,331/- on account of TDS and Rs. 1,75,000/- on account of advance tax pertaining to the amalgamating company while assessing/computing the income u/s 143(3) read with Section 143(3A) and 143(3B) of the Act in the case of the amalgamated company. Hence,
Ground nos. 1, 7, 8 & 9 are allowed.
3.3. Ground nos. 2, 3, 4, 5 & 6 relate to the appeal against the order u/s 143(3) being infructuous as the cause of action had arisen in the intimation u/s 143(1) of the Act. Since in the preceding para, a finding has been given that the credit of taxes paid has to be allowed in the case of the amalgamated company, hence these grounds of appeal are also allowed and since no variation to the income computation was made in the order u/s 143(3) of the Act, and the demand arisen on account of intimation u/s 143(1) of the Act had been subsumed in the demand raised vide order u/s 143(3), the Ld. CIT(A) ought to have decided the appeal relating to the claim of credit for taxes paid. Hence, all these grounds of appeal are also allowed.
I.T.A. No.: 1957/KOL/2024
Assessment Year: 2018-19
Deepshikha Trading Company Pvt. Ltd.
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[Rakesh Mishra]
Judicial Member

Accountant Member
Dated: 14.01.2025
Bidhan (P.S.)
Copy of the order forwarded to: