Merger of pan

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 December 2013 Suppose Co. A and B has been merged with an existing Co. C on 31-08-2012 and till 31st August few companies has deducted TDS and deposited the same in Co. A & B respectively and the assessee has filed the ITR of Co. C for the year ended 31st March, 2013. Now the Deductor is not ready to file the correction statement for TDS after merger.

Now my question is how the assessee can claim the credit of TDS in CO. C of Co. A and B as it will be rejected by the CPC on the basis that TDS not matched with 26AS.

Thanks in Advance.

CA Pradeep Kumar Rajput

CA Pradeep Kumar Rajput (Expert)
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07 December 2013 This happens in almost all the cases of merger; and deductor's mostly big company do not entertain you request to revise their TDS return. however you are entitled for the TDS deducted in the name of merged companies subject to other conditions i assume you are entitled for TDS deducted in the name of merged companies.

When you are in such a situation file your income tax return and take credit of TDS deducted in the name of merged companies; yes definitely you will get the demand notice from the department due to non matching of TDS amount with form 26AS U/S 143(1); in response to such notice approach you jurisdictional AO for deletion of demand along with full documentation.
Mind that AO initially will say that he dont have jurisdiction and you have to file rectification but you will get you demand deleted form there only.

Mansi Almeida

Mansi Almeida (Expert)
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25 January 2017 Will appreciate if someone can help me on - system of merger of PAN and on merger, credit will be reflected in Form 26AS of the amalgamated company.

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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03 August 2024 When companies undergo a merger, particularly with regard to Tax Deducted at Source (TDS) and PAN details, there are specific procedures and challenges associated with ensuring that TDS credits are properly accounted for in the amalgamated company's tax returns. Here’s how you can address the issues related to TDS credit in the context of a merger:

### 1. **Handling TDS Credit Post-Merger**

#### **Procedure to Claim TDS Credit**

1. **Intimate the Tax Authorities:**
- Notify the Income Tax Department about the merger. The merging companies (Co. A and Co. B) and the amalgamated company (Co. C) should inform the tax authorities about the merger and the transfer of TDS credits. This is usually done by submitting a copy of the merger order and any other necessary documentation.

2. **File a Correction Statement with the Deductor:**
- While the deductor is not obligated to file a correction statement, you can request them to do so. Explain the situation and provide documentation to support your request. However, if the deductor is unwilling or unable to correct the TDS records, you might need to rely on other methods to claim the TDS credit.

3. **Claim TDS Credit in ITR:**
- In the Income Tax Return (ITR) of Co. C, claim the TDS credit for Co. A and Co. B as part of the tax credit section. You will need to ensure that the TDS credit claimed matches the amounts reported in Form 26AS.

#### **Addressing the Mismatch**

If there is a mismatch between the TDS claimed and Form 26AS due to the merger, follow these steps:

1. **File a Revised Return:**
- If the TDS credit is not reflecting correctly in Form 26AS, file a revised return for Co. C, providing a detailed explanation for the discrepancy. Attach all relevant documents related to the merger and TDS claims.

2. **Request a Rectification:**
- Submit a request for rectification of TDS credits with the CPC (Centralized Processing Centre). Provide evidence of the merger and TDS credits pertaining to Co. A and Co. B.

3. **Documentation and Evidence:**
- Maintain records of all communications with the deductors, tax authorities, and any relevant documents such as the merger order, proof of TDS payments, and copies of Form 26AS.

### 2. **System of Merging PANs**

When a merger occurs, the following steps should generally be followed for PAN and TDS credit purposes:

1. **PAN and TAN Transfers:**
- PAN of the merging companies (Co. A and Co. B) is usually cancelled upon merger, and a new PAN is issued for the amalgamated company (Co. C). The amalgamated company should update its PAN details in all relevant records.

2. **TDS and Form 26AS Updates:**
- The TDS credits that were reflected under the old PANs of Co. A and Co. B should be transferred to the new PAN of Co. C. This is typically handled through the tax authorities and the deductor’s records.

3. **Updating Form 26AS:**
- Ensure that Form 26AS for Co. C reflects the TDS credits of Co. A and Co. B. This may involve coordination with the tax authorities if the credits are not updated automatically.

### 3. **Practical Tips**

- **Consult Tax Professionals:** Engage with tax professionals or consultants who specialize in mergers and tax matters to ensure compliance and proper handling of TDS credits.

- **Follow Up Regularly:** Regularly follow up with the tax authorities and deductors to ensure that the necessary updates and corrections are made.

- **Document Everything:** Keep thorough records of all correspondence, filings, and documentation related to the merger and TDS claims.

### Summary

- **Claim TDS Credit:** You can claim the TDS credit of Co. A and Co. B in the ITR of Co. C.
- **Handle Mismatches:** If there's a mismatch, file a revised return and request rectification with the CPC.
- **Coordinate Updates:** Ensure PAN, TAN, and TDS records are updated to reflect the merger.

If these steps do not resolve the issue, seeking professional advice and potentially escalating the matter with the tax authorities may be necessary.