Re: Credit for MAT paid under VVS

Dear Team,

We have order under section 143 rws 263 wherein certain additions have been made to MAT computation. We have following two queries:
1. Whether MAT paid under the scheme will be allowed to be carried forward to be set off in future years
2. The company has merged into another company as on date. Hence, will the MAT credit be allowed to be set off in merged entity.
Thanks in advance

We have to read the order passed by the Commissioner under revision . If the direction is not to allow carry forward  credit , the assessee should have filed an appeal before the Appellate Tribunal .If the order u./s 263 is simple set aside  the assessee can file an appeal before the  CIT (A) after giving effect to the  order of commissioner u/s 263 of the Act.  

Please refer Circular No 9 /2020   dt 22-04 -2020 , issued by the CBDT  which reads as under ; 

Q. no 53 : If loss is not allowed to be adjusted while calculating  disputed  tax, will  that loss be allowed to be carried forward ? 

Ans : As per the amendment  proposed in Vivad  se Vishwas, in a case where the dispute  in relation to an assessment year relates to reduction of Minimum Alternate Tax (MAT) credit or reduction of loss or depreciation, the appellant shall have an option either to (i)  include the  amount  of tax related to such  MAT credit or loss or depreciation in the amount of  disputed tax and carry forward the MAT credit or loss or depreciation or (ii) to carry forward the reduced tax credit or loss or depreciation. CBDT  will prescribe the manner of calculation in such cases. 

It is desirable to  wait and reads the clarification of CBDT as and when issued and take the appropriate decision .

As regards the merger one has to read the order of the Court sanctioning the scheme of merger .    In  DCIT v. TCS E-Serve International Ltd. (2019) 182 DTR 273 / 201 TTJ 997 (Mum.)(Trib.) Dismissing Revenue’s appeal, Tribunal held that even though no specific provision is provided in the Act in respect of carry forward and set off of MAT credit in respect of demerger, the credit for such MAT credit needs to be allowed to the assessee, and not to thedemerged Company (SEZ units).   The issue being debatable the designated authority may not be able to take  view unless the Board issues clarification .

 

 

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