Shiva Pharmachem Limited Vs DCIT (ITAT Ahmedabad)
In a recent decision, the Income Tax Appellate Tribunal (ITAT) in Ahmedabad addressed the issue of TDS credit eligibility for Shiva Pharmachem Limited. The tribunal ruled that the Assessing Officer (AO) should allow TDS credit to the company, even if the tax deduction certificates were issued in the name of its amalgamated company, provided that the related income is reflected in Shiva Pharmachem’s assessment.
Background of the Case
The appeal filed by Shiva Pharmachem Limited challenged the decision of the Commissioner of Income Tax (Appeals) – National Faceless Appeal Centre (NFAC) dated July 24, 2023, concerning the denial of TDS credit by the Centralized Processing Centre (CPC), Bengaluru. The CPC had issued a rectification order under Section 154 of the Income Tax Act, 1961, on December 19, 2022, refusing TDS credit totaling Rs. 10,09,254 for the assessment year 2021-22.
The dispute originated from an arrangement involving Shiva Pharmachem and Tash Investment Pvt. Ltd., approved by the National Company Law Tribunal (NCLT) on September 10, 2020. Under this scheme, Tash Investment Pvt. Ltd. was amalgamated with Shiva Pharmachem, effective April 1, 2019. Consequently, all income generated by Tash Investment Pvt. Ltd. before the effective date was transferred to Shiva Pharmachem’s books and reported in its returns.
Key Issues Raised
Shiva Pharmachem argued that since the income from Tash Investment Pvt. Ltd. was included in its tax filings, it should be eligible to claim TDS credit related to this income, regardless of the TDS certificate being in the amalgamated company’s name. The CPC, however, denied this credit, citing procedural issues under Rule 37BA of the Income Tax Rules, which pertains to TDS credit in cases of transfer or succession.
