2024 (9) TMI 422 - AT - Income Tax

Denial of credit of TDS deducted u/s 194H and 194Q - appellant being a Kachha Adhatiya (Commission Agent) and claiming TDS credit - HELD THAT - As already been clarified in circular number 452 dated 17th of March 86 issued by the Central Board of Direct taxes that so far as kachha Artia is concerned , then the turnover does not include the sales affected on behalf of the principals and only Commission has to be considered for the purpose of Income Tax under Section 44AB and in support thereof the assessee is Kachha artia and made purchases from the farmers on behalf of buyer and for the very same amount the assessee raised its invoice to the buyer. Therefore for such type of transactions, the assessee receives Commission on which tax is deducted under section 194H of the Act. Also in some cases buyers deduct Tax u/s 194Q of the Act apart from u/s 194 H and in this regard sample invoices raised by the assessee had also been placed on record. As relying on Shri Madan Lal Gupta 2024 (4) TMI 1174 - ITAT JAIPUR Bench directs the AO to allow the credit of TDS deducted under section 194 H and 194Q to the assessee. Thus this ground raised by the assessee stands allowed.

Summary

Issues:
Denial of credit of TDS under sections 194H and 194Q of the Income Tax Act.

Analysis:
The appeal was against the order of the ld. Addl. CIT(A)-2, Chennai, regarding the denial of credit of TDS under sections 194H and 194Q. The appellant contended that the intimation passed by the DCIT, CPC Bangalore was void-ab-initio and deserved to be quashed. The main issue was the denial of credit of TDS amounting to Rs. 2,62,264/- despite the appellant being a Kachha Adhatiya (Commission Agent) and claiming TDS credit of Rs. 2,96,580/-. The appellant argued that the AO erred in not allowing the full credit of TDS deducted under section 194H as claimed in the return. The appellant provided documentary evidence to support their claim, including a certificate from Krishi Upaj Mandi Samiti and a CBDT circular. The appellant also relied on a previous decision by the Co-ordinate bench of ITAT in a similar case.

The Tribunal heard arguments from both parties and examined the material on record. It was noted that the appellant had specifically claimed TDS under sections 194H and 194Q in the return of income. The AO had only allowed credit of Rs. 34,316/- as per Rule 378A of Income Tax Rules, 1962, despite the appellant being a Kachha Artia not required to disclose turnover on which tax was deducted under section 194Q. The appellant's income tax return and supporting documents clearly showed the TDS claimed and the corresponding receipts. The Tribunal found that the AO had erred in not allowing the full credit of TDS as claimed by the appellant, disregarding the appellant's status as a Kachha Artia. The Tribunal also referred to circular number 452 dated 17 March 1986, which clarified that turnover for Kachha Artia does not include sales made on behalf of principals, only commission should be considered for tax purposes.

Based on the facts, arguments, and legal precedents presented, the Tribunal held that the appellant was entitled to credit of TDS deducted under sections 194H and 194Q. The Tribunal directed the AO to allow the credit of TDS to the appellant. Consequently, the appeal of the assessee was allowed with no orders as to costs.

In conclusion, the Tribunal's decision favored the appellant, emphasizing the correct application of tax deduction rules for Kachha Artia and the necessity to consider commission rather than turnover for tax purposes. The judgment highlighted the importance of following relevant circulars and legal precedents in determining TDS credits for Commission Agents.