7. [2019]
111 taxmann.com 10 (Trib.) (Mum.) Ambuja Cements Ltd. vs. DCIT ITA No.: 3643/Mum/2018 A.Y.: 2007-08 Date of order: 5th September,
2019
Section 115JAA r.w.s. 263 – Amalgamated
company is entitled to claim set-off of MAT credit of the amalgamating company
FACTS
The assessee, engaged in the manufacture and
sale of cement, filed its return of income wherein a MAT credit of Rs. 20.12
crores was claimed. The AO, while completing the assessment, allowed MAT credit
of only Rs 6.99 crores instead of Rs 20.12 crores as claimed in the return of
income.
Aggrieved, the assessee preferred an appeal
to the CIT(A) on several grounds, one of which was that MAT credit was
short-granted. The CIT(A) directed the AO to grant MAT credit in accordance
with law. The AO passed an order giving effect to the order of CIT(A) wherein
he allowed MAT credit of Rs. 20.12 crores to the assessee.
The CIT was of
the opinion that the MAT credit allowed by the AO is excessive as the MAT
credit allowed includes Rs. 6.99 crores being MAT credit of ACEL, a company
which was amalgamated into the assessee company. She, accordingly, exercised
her powers u/s 263 of the Act and directed the AO not to grant MAT credit of
Rs. 6.99 crores because according to her the amalgamated company is not
entitled to MAT credit of the amalgamating company.
Aggrieved, the assessee preferred an appeal
to the Tribunal.
HELD
The Tribunal observed that there is no
restriction with regard to allowance of MAT credit of an amalgamating company
in the hands of the amalgamated company. According to the Tribunal, a plain
reading of the aforesaid provision reveals that MAT credit is allowed to be
carried forward for a specific period.
In the case of Skol Breweries Ltd.,
the Tribunal, Mumbai Bench, while deciding an identical issue, has held that
carried forward MAT credit of the amalgamating company can be claimed by the
amalgamated company. A similar view has been expressed by the Tribunal,
Ahmedabad Bench, in Adani Gas Ltd.. If we consider the issue in
the light of the ratio laid down in the aforesaid decisions, there
cannot be two views that the assessee is entitled to claim carried-forward MAT
credit of the amalgamating company Ambuja Cement Eastern Ltd. (ACEL).
The Tribunal also observed that while
completing the assessment in case of the amalgamating company ACEL in the A.Y.
2006-07, the AO has also concluded that carried-forward MAT credit of ACEL
would be available in the hands of the present assessee.
Keeping in view the assessment order passed
in case of the amalgamating company as well as the decisions referred to above,
the Tribunal held that the principle which emerges is that the carried-forward
MAT credit of the amalgamating company can be claimed by the amalgamated
company. Viewed in this perspective, the decision of the AO in allowing set-off
of carried forward MAT credit of Rs. 6,99,46,873 in the hands of the assessee
cannot be considered to be erroneous. Therefore, one of the conditions of
section 263 of the Act is not satisfied. That being the case, the exercise of
power u/s 263 of the Act to revise such an order is invalid.
The Tribunal quashed the impugned order
passed by the CIT.
This ground of appeal filed by the assessee
was allowed.
