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Facts
Nexion Surface P. Ltd. (NSPL) sought credit for TDS, TCS, and advance tax paid under the PAN of Nexion International P. Ltd. (NIPL), from which a business undertaking demerged into NSPL. The tax authorities, including DDIT CPC and CIT(A), denied these credits as they were not reflected in NSPL's 26AS or PAN, and the CIT(A) dismissed the appeal ex-parte.
Held
The Tribunal acknowledged the NCLT-approved demerger and the complexity of the tax credit claim. It held that the assessee deserved an opportunity to present its case and evidence before the lower authority. Consequently, the Tribunal set aside the CIT(A)'s order and remitted the matter back to the Assessing Officer for fresh adjudication on merits.
Key Issues
Entitlement of a resulting company to claim credit for TDS, TCS, and advance tax paid by the demerged company for a demerged undertaking, especially when not reflected in its own PAN/26AS.
Sections Cited
143(1), 154, 139(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: DR. ARJUN LAL SAINI, AM. &
Captioned appeal filed by the assessee is directed against the order passed by the National Faceless Appeal Centre [(in short “NFAC/Ld. CIT(A)”] vide order dated 27.08.2024, which in turn assessment order passed by Assessment Unit, Income Tax Department / Assessing Officer under section 143(1) and 154 of the Income Tax Act, 1961 (in short “the Act”), vide order dated 02.05.2024.
Grounds of appeal raised by the assessee are as followed:
The learned DDIT CPC, Bengaluru has erred in not granting the credit of advance tax of Rs. 12,21,00,000, TDS of Rs. 12,47,002 and TCS of Rs. 22,263 on the ground that the advance tax payments are not available for the assessment year under consideration and TDS and TCS credit is not in form 26AS inasmuch as;
(a) such advance tax, TDS and TCS pertain to the business undertaking of Nexion International Private Limited AAVCS2567C NIPL and are duly reflecting in PAN of NIPL and form 26AS of NIPL, (b) such business undertaking of NIPL is demerged from NIPL to the appellant company with effect from 1st April 2022 vide the order pronounced on 21-07-2023 by the Honble National Company Law Tribunal NCLT, Ahmedabad Bench TAX DEPA
(c) and the credit claimed by the appellant company towards such business undertaking demerged into it is as per law.
Facts of the case that the appellant has Nexion Surface Private Limited (“appellant company” or “NSPL” or “resulting company”) had filed its return of income u/s. 139(1) on 23.11.2023 showing a total income of Rs. 57,26,01,820/-. There is another company, viz, Nexion International Private Limited. During the year under consideration, the business comprising of manufacturing and marketing of vitrifies tiles was demerged from NIPL to the NSPL. Accordingly, all the transaction related to the demerged undertaking that took place during the financial year – 2022-23 were executed in the name of NIPL. The tax deducted at source (“TDS”) and tax collected at source (“TCS”) are in the PAN of NIP. Further the advance tax was also paid in the PAN of NIPL. All the transactions related to the demerged undertaking which, at the time of their execution, were in the name of NIPL, from part of the financial statement of NSPL and also computed after giving effect to such a demerged order. As the undertaking was transferred from NIPL to NSPL, all the tax deducted at source, tax collected at source and advance tax reported/paid in PAN and TAB of NIPL are claimed in the tax computation of NSPL. The credit of such TDS, TCS and advance tax are claimed by NSPL against its tax liability. Such fact can be verified from the acknowledgement of return of income, computation of income. return of income of the appellant company processed, the Deputy Director of Income Tax, CPC, Bangaluru (“DDIT, CPC”) has not granted credit of such TDS, TCS and advance tax on the ground that they don’t reflect in from 26AS and in PAN of NSPL. 2) The appellant company has filed rectification on the income tax portal. However, DDIT, CPC has by order only rectify the interest fees payer.
The assessee filed an appeal against the order passed by the Ld. AO dated 22.12.2023. The appeal of the assessee was dismissed by the Ld. CIT(A) with following observation;
“From the conduct of the appellant as per the facts noted above, it is clear that the appellant does not wish to pursue the appeal. even otherwise on the merits of it also, I do not see any reason to differ with the findings of the AO since no attempt has been made by the assessee to discharge its onus. Hence, respectfully following the above-mentioned judicial pronouncements and in view of the facts of the case, the appeal is hereby dismissed. In the result, the appeal is dismissed.”
That the assessee filed an appeal against the impugned order of the Ld. CIT(A) dated 27.08.2024 before us.
During the course of hearing, the Ld. AR of the assessee’s company of NSPL came to existing with effect from the 01.04.2022 by the order of NCLT, Ahmedabad Bench, vide order Pronouncement dated 21.07.2023 all TDS/ TCS and Advance Tax paid in PAN Number of NIPL. The Ld. AR of the assessee prayed that one more opportunity to be given to the assessee to represent the case before the lower authority.
On the contrary, the Ld. Sr. DR relied on the order of the Ld. CIT(A), Ld. ITO and CPC, Bangaluru.
we have heard both the parties and perused the material available on record. We note that the notices for hearing were sent to the assessee’s through email address, but the order does not speak about the services of notices on the assessee’s company. That the demerger case of the above said company was going on before the Hon’ble NCLT, Ahmedabad, whereby NIPL was separated from NSPL the assessee. The NCLT has passed a demerger order Pronounced on dated 21.07.2023, whereby company has divided in two identity, one is NSPL (Naxion Surface Private Limited) and another is NIPL (Naxion International Private Limited). We further note that TDS/TCS/Advances tax was paid by the assessee PAN Number of NIPL at the time of filing return it was requested by way of filing return that the credit of tax paid may kindly by granted to the assessee. Since the other identity i.e., NIPL is not taken credit of the tax paid. The Ld. CIT(A) has passed an ex-parte order and confirmed the action of Lower Authorities. CPC, Bangluru u/s. 143(1). In this facts and circumstance in the case. We are of the view that the assessee deserve for an opportunity to explain his case before the Lower Authority. Therefore, we set aside the order of the Ld. CIT(A) dated 27.08.2024 and remitted the matter back to the file of the Ld. AO for fresh adjudication on merit. After affording due opportunity to the assessee to explain about TDS, TCS / Advance tax paid by the assessee. We direct to the assessee to submit relevant details/documents and evidences before the Ld. AO.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 26/02/2025