2024 (8) TMI 1185 - AT - Income Tax

Denial of credit of TDS - AR submitted that the assessee is only a commission agent and therefore the total gross sale proceeds cannot be treated as the income of the assessee and thereby the Ld. Revenue Authorities have erred in applying the Rule-37BA - As reiterated that since the assessee is only a commission agent, the assessee is eligible to get credit of the entire amount deducted as tax at source u/s. 194Q HELD THAT - As through the CBDT Circular No. 452, dated 17th March, 1986 relied on by the Ld. AR and perused the decision of this Tribunal in the case of Yagneswari General Traders 2024 (3) TMI 1344 - ITAT VISAKHAPATNAM as held Kaccha Arahtias turnover includes only the gross commission and not the sales effected on behalf of their principals. It is a f act that the assessee is only a licensed commission agent in Agricultural Market Committee Yard, Guntur which is formed under the rules and regulation of the Government of Andhra Pradesh. Therefore, the Circular issued by the CBDT (supra) squarely applies to the assessee and hence assessee is acted only as an agent (kaccha arahtia) and therefore it is eligible to get credit of the entire amount deducted as tax at source and there is no short fall of TDS as concluded by the Ld. Revenue Authorities - 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. As following above 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. Thus, the grounds raised by the assessee are allowed.

Summary

Issues:
1. Disallowance of TDS credit by the Assessing Officer
2. Application of Rule 37BA of the Income Tax Rules, 1962
3. Interpretation of Circular No. 452, dated 17th March, 1986 by the Central Board of Direct Taxes
4. Comparison with a previous Tribunal decision in the case of Yagneswari General Traders vs. ITO

Analysis:
1. The appeal was filed against the order of the Commissioner of Income Tax (Appeals) regarding the disallowance of TDS credit by the Assessing Officer. The appellant, a licensed chillies commission agent, claimed TDS credit for a specific amount but was granted a lower credit by the Assessing Officer. The appellant argued that the entire amount should be credited as tax at source under section 194Q of the Income Tax Act, 1961.

2. The Authorized Representative contended that the appellant, being a commission agent, should not have the total gross sale proceeds treated as income. Referring to Circular No. 452, issued by the Central Board of Direct Taxes, it was argued that the turnover of commission agents does not include sales on behalf of principals. The appellant relied on a previous Tribunal decision to support their claim.

3. The Tribunal analyzed the Circular and the previous decision, emphasizing that the turnover of commission agents only includes gross commission, not sales on behalf of principals. As the appellant acted as an agent, the entire TDS amount should be credited. The Tribunal set aside the orders of the Revenue Authorities and directed the Assessing Officer to grant credit for the full TDS amount.

4. Following the principle of consistency with a previous Tribunal decision, the Tribunal allowed the appeal, directing the Assessing Officer to grant credit for the entire TDS amount deducted. The judgment was pronounced in favor of the appellant on 23rd August, 2024.