A contentious issue of MAT credit after amalgamations and demergers
Throughout its existence, numerous provisions dealing with business reorganisation have been inserted in the Income-tax Act, 1961 (‘the IT Act’) by the Legislature to promote economic growth, industrialisation and infrastructure development.
Two of the most important provisions in this regard relate to amalgamations and demergers, which have been made exempt from tax under the IT Act subject to the fulfilment of certain conditions. However, while statutory provisions have been laid down to govern various aspects of these modes of business reorganisation, one significant aspect which is yet to be addressed through legislative intervention is whether Minimum Alternate Tax (‘MAT’) credit of the predecessor company can be transferred to the amalgamated or resulting company.