2024 (8) TMI 1478 - AT - Income Tax

Denial of Credit of TDS - assessee is acted only as an agent (kaccha arahtia) -assessee deducted tax at source U/s. 194Q and 194A of the Act from the commission income - as argued appellant is only a commission agent and therefore the CPC is not justified in applying Rule 37BA by treating the gross sale proceeds as the income of the appellant. HELD THAT - Considering the identical facts and circumstances of the assessee s case with that of the appeal decided by the Tribunal in the case of Yagneswari General Traders 2024 (3) TMI 1344 - ITAT VISAKHAPATNAM following the principle of consistency, no hesitation to set-aside the orders of the Ld. Revenue Authorities and direct the Ld. AO to grant credit of the entire amount deducted as tax at source in the case of the assessee.

Summary

Issues:
Interpretation of Rule 37BA of the Income Tax Rules, 1962 in the context of commission income and TDS credit under sections 194Q and 194A of the Income Tax Act, 1961.

Detailed Analysis:

1. Interpretation of Rule 37BA and TDS Credit Disallowance:
The appeal involved a dispute regarding the disallowance of TDS credit by the Assessing Officer (AO) under sections 194Q and 194A of the Income Tax Act, 1961. The appellant, a licensed chillies commission agent, contested the disallowance, arguing that the total gross sale proceeds should not be treated as income, citing Rule 37BA of the Income Tax Rules, 1962. The appellant relied on Circular No. 452 issued by the Central Board of Direct Taxes (CBDT) to support the contention that only the commission charged should be considered as turnover for commission agents. The Authorized Representative (AR) emphasized that the appellant, being a commission agent, was entitled to the full TDS credit amount. The AR also referenced a previous Tribunal decision in favor of a similar appellant, highlighting the consistency in applying the law.

2. Judicial Analysis and Decision:
The Judicial Member analyzed the contentions of both parties, reviewed the CBDT Circular and the precedent set by the Tribunal in a similar case. The Member noted that the Circular clarified that for commission agents like the appellant, turnover should only include the gross commission, not the sales made on behalf of principals. Considering the appellant's status as a licensed commission agent in an Agricultural Market Committee Yard, the Member concluded that the Circular applied directly to the appellant's case. Therefore, the Member set aside the orders of the Revenue Authorities and directed the AO to grant the full TDS credit amount to the appellant. The decision was based on the principle of consistency with the earlier Tribunal ruling and the clear interpretation of the relevant rules and circulars.

3. Application of Precedent and Final Decision:
Drawing parallels with the previous Tribunal decision involving a similar appellant, the Judicial Member upheld the appeal, allowing the appellant to receive the entire TDS credit amount. By applying the principle of consistency in interpreting the law and relevant circulars, the Member found in favor of the appellant. The decision highlighted the importance of correctly interpreting rules and circulars to determine the tax treatment of commission income for licensed agents. The final judgment allowed the appeal, emphasizing the proper application of TDS credit rules in line with the appellant's status as a commission agent.

In conclusion, the judgment resolved the issue of TDS credit disallowance by interpreting Rule 37BA and relevant circulars to determine the tax treatment of commission income for a licensed commission agent, ultimately allowing the appeal and granting the full TDS credit amount to the appellant.