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Facts
The assessee, a commission agent dealing in Areca nuts, filed its return of income and claimed TDS credit. However, the CPC granted only a partial TDS credit, observing that gross receipts in Form 26AS were higher than the declared income. The assessee argued that the turnover from which TDS was deducted under section 194Q was not liable to tax.
Held
The Tribunal held that the assessee's declared income from business/profession was higher than the TDS claimed, and as per Rule 37BA read with Section 199 of the Act, the assessee is eligible for the full TDS credit. The lower authorities' observations were considered perverse.
Key Issues
Whether the assessee is eligible for full TDS credit when the claimed TDS is based on turnover not entirely offered as income, but the business/profession income declared is higher than the TDS amount.
Sections Cited
194Q, 37BA, 199, 143(1a)
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Income Tax Appellate Tribunal, “SMC” BENCH : BANGALORE
Before: SHRI. LAXMI PRASAD SAHU & SHRI. PRAKASH CHAND YADAV
Per Laxmi Prasad Sahu, Accountant Member :
This appeal filed by the assessee against the Order passed by the ld. CIT(A) vide DIN and Order No.ITBA/APL/S/250/2024-25/1071513250(1) dated 24.12.2024, challenging the only issue regarding not granting full TDS credit of Rs.7,76,965/-. The CPC granted TDS credit of Rs.59,862/-.
Briefly stated, the facts of the case are that the assessee is a commission agent dealing in Areca nuts and holds licence from the Agricultural Produce Marketing Committee. The assessee buys areca nuts from agriculturists whose income are exempt from tax and it is sold on auction to various traders and buyers
Section Particulars Amount (Rs.) 194A of the Income Tax Act, 1961 Interest 72,270/- (hereinafter called ‘the Act’) 194H of the Act Commission 36,699/- 194Q Purchase 2,47,866/- 194I(b) 68,844/- Total 7,79,679/-
Assessee filed return of income on 19.11.2022 declaring total income of Rs.38,28,600/- as under, and claimed TDS as noted above :
i. Income from House Property – Rs.4,44,807/- ii. Profit and Gains from Business/Profession – Rs.31,65,369/- iii. Income from Other Sources – Rs.2,18,422/-
The CPC issued defective notices to the assessee which were replied to but it was not considered and granted only TDS of Rs.59,862/- observing that the gross receipts shown in Form No.26AS on which credit for TDS has been claimed are higher than the total of receipts shown under all heads of income, in the return of income. Therefore, correct taxable income has not been offered to tax and accordingly as per Rule 37BA of the Act, the TDS credit qua disposed the receipts is only allowable. The assessee submitted that the sales from which tax is deducted under section 194Q of the Act is not liable to tax. Therefore, the entire turnover wa not disclosed in the income tax return. In appeal before the learned CIT(A), the CIT(A) noted that the assessee works on value addition of the product so that the same can be sold at higher prices for earning more profit and he also discussed in detail the issue and observed that the assessee falls under the Page 3 of 4 category of pacca arahtia. Therefore, he should consider the total turnover / sales while determining actual income but in the case of the assessee, it has not been disputed by the AO and the turnover qua for which disputed by the AO and the turnover for which credit for TDS has been made not been taken into consideration while filing return of income and accordingly the assessee cannot claim tax credit for income which does not form part of his total income or turnover. Accordingly, he dismissed the appeal of the assessee.
Aggrieved from the above Order, assessee filed appeal before the Tribunal. The learned Counsel reiterated the submissions made before the lower authorities and submitted that the observation made by the ld. CIT(A) is completely wrong. The entire turnover is reported under section 194Q of the Act are not the income of the assessee. The income part has been declared by the assessee. The total income declared by the assessee under profit and gains from business / profession of Rs.31,65,369/- which includes income earned on sale through actions to the buyers but the CIT(A) ignored this fact. The assessee has declared only income earned from different sources. The assessee has disclosed his income in terms of CBDT Circular No.452[F.No.201/3/85-IT(A-II)], dated 17.03.1986.
The learned DR relied on the Order of the lower authorities.
Considering the rival submissions, we noted that hear the dispute is only regarding not granting full TDS credit as claimed by the assessee observing that the corresponding turnover shown in Form 26AS is not declared in the return of income. On going through the acknowledgement of processing of return of income under section 143(1a) of the Ac, the assessee has declared income under the head profit and gains from business / profession of Rs.31,65,369/- and the total income declared is Rs.38,28,600/-. The CPC has accepted the return. We also observed that the learned CIT(A) has discussed the issue in detail and the Page 4 of 4 CPC has processed the return but the corresponding turnover has not been added as income of the assessee. Only the TDS credit has not been given. The observation made by the CPC as well learned CIT(A) is perverse that the income has not been disclosed in the return. The assessee’s income declared under profit and gains from business / profession is more than the TDS claimed by the assessee. Therefore, as per Rule 37BA r.w.s. 199 of the Act, the assessee is eligible for TDS credit. Accordingly, the TDS credit is to be allowed to the assessee. The AO is directed to give TDS credit after due verification.
In the result, appeal filed by the assessee is allowed.