Case Law Details
DCIT Vs Brandon & Co. (P) Ltd. (ITAT Mumbai)
Introduction: The Income Tax Appellate Tribunal (ITAT) Mumbai recently ruled on the appeal filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-3, Mumbai. The case, titled DCIT vs Brandon & Co. (P) Ltd., involves a crucial decision on the set-off of carry-forward loss of capital gains in the context of a demerger.
Background of the Case: The case revolves around the assessment for the A.Y. 2012-13, where the assessee company, Brandon & Co. Pvt. Ltd., demerged a part of its business to Ramrod Advisors Pvt. Ltd. The dispute arises from the set-off claim of long-term capital loss incurred during AY 2006-07.
First Issue: Set-off of Capital Loss in Demerger: The primary contention raised by the Revenue is the alleged error in allowing the set-off of carry-forward loss of capital gains in the case of demerger. The ITAT examined the provisions of Section 74 of the Income Tax Act, 1961, and upheld the CIT(A)’s decision, emphasizing that the loss of the demerged company, Brandon & Co. Pvt. Ltd., could be set off against its own capital gains.
Second Issue: MAT Credit in Demerger: The second aspect of the case involves the carry-forward and set-off of Minimum Alternate Tax (MAT) credit in the context of the demerger. The ITAT, affirming the CIT(A)’s decision, clarified that MAT credit belongs to the assessee and can be carried forward even in the case of demerger.
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