GOPIKISHAN PALLOD,HYDERABAD vs. INCOME TAX OFFICER, WARD-7(1), HYDERABAD

Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT (A). Before the learned CIT (A) the assessee challenged the denial of credit for TDS in light of relevant provisions of Rule 37BA of the I.T. Rules, 1962 and provisions section of 194 O of the I.T. Act, 1961 and argued that, as per the provision of section 194 O of the Act, where sale

The learned CIT (A) after considering the relevant provisions of Rule 37BA, rejected the argument of the Assessing Officer and upheld the reasons given by the assessee to allow the proportionate credit for TDS by holding that although TDS has been deducted before the sales return happened, but the fact remains that against this sale return, the money is refunded by the purchaser, then the tax deducted may be adjusted in his sale against the same purchaser. No adjustment is required, if the sale return is replaced by the goods by the purchaser as in that case, the seller on which the tax was deducted u/s 194 O of the Act has been compensated with goods replaced. Thus, in common parlance, any prudent businessman will not complete the sales return transaction partly i.e. returning the consideration without the element of TDS. Therefore, held that there is no merit in the Page 3 of 8 argument of the assessee and accordingly, dismissed the appeal filed by the assessee.

Aggrieved, the assessee is in appeal before the Tribunal.

The learned Counsel for the assessee submitted that the learned CIT (A) is erred in upholding the reasons given by the Assessing Officer to allow proportionate credit for TDS, even though the assessee has claimed TDS as per Form 26AS and further, the said claim is in accordance with Rule 37BA of the I.T. Rules, 1962. The learned Counsel for the assessee referring to the provisions of section 194 O of the Act has submitted that, as per section 194 O, where sale of goods or provision of services of an e- commerce participant is facilitated by an e-commerce operators through his digital or electronic facility or platform, such e- commerce operator, at the time of credit of amount of sale or service or both to the account of e-commerce or at the time of payment thereof whichever is earlier deduct income tax @ 1% of the gross amount of such sales of serve or goods. The learned Counsel for the assessee, further referring to the provisions of section 52 of the GST Act submitted that as per the GST Act, every electronic commerce operation, not being an agent shall collect an amount calculated at such rate not exceeding 1% as may be notified by the Govt, of the net value of taxable sale made through it by other suppliers where the consideration with respect to such supply is to be collected by the operator. The learned Counsel for the assessee referring to the above provisions

On the other hand, the Sr. AR for the Revenue has supported the order of the learned CIT (A) and submitted that the fact with regard to the sales return is not explained by the assessee, whether the sales return are net of TDS or gross amount. In case, the assessee refunded the gross amount to the buyer then the question of allowing credit for TDS on gross amount does not arise. The learned CIT (A) after considering the relevant fact has rightly confirmed the reasons given by the Assessing Officer and thus, the order of the learned CIT (A) should be upheld.

We have heard the rival contentions, perused the relevant material available on record and gone through the orders of the authorities below. Provisions of section 194 O of the Act deals with payment of certain sums by e-commerce operators to e-commerce participants. As per the said provision, where sale of goods or provision of service of an e-commerce participant is facilitated by e-commerce operator, such e-commerce operator at the time of credit of amount or at the time of payment whichever is earlier deduct income tax @ 1% of the gross amount of such sale or service of goods. In the present case, the appellant is an e- commerce participant and selling goods through Amazon Seller Services (P) Ltd and Reliance Retail Ltd etc., The appellant has made a turnover of Rs.1,39,42,905.95 through e-commerce operators on which TDS @ 1% has been deducted by the e- commerce platform operators. Out of the above sale, the assessee has shown sales return of Rs.23,87,202.48 and the net sales turnover declared by the assessee for the year under consideration was at Rs.1,15,55,703.47. The assessee has claimed TDS credit of Rs.1,62,412/- on the basis of Form No.26AS. The Assessing Officer CPC, allowed the proportionate credit for TDS at Rs.1,38,211/- and according to the Assessing Officer CPC as per Rule 37BA of the I.T Rules,1962 credit for TDS shall be allowed in the year in which income relatable to said TDS has been declared.

We find that, the assessee has reported the income relatable to TDS credit of Rs.1,62,412/- for the year under Page 6 of 8 consideration. However, the Assessing Officer misunderstood the facts and observed that the assessee has reported only part of the turnover and not entire turnover on which TDS has been deducted, only on the basis of the turnover reported in financial statement, even though the assessee has reconciled the said turnover with sales return. The assessee has reported sales return of Rs.23,87,202/- on which TDS has been deducted by the e- commerce platform operators. If we consider gross sales, sales return and net sales declared by the assessee, it tallies with the total sales achieved through e-commerce platform operators on which TDS has been deducted. Therefore, we are of the considered view that the Assessing Officer is erred in allowing credit for TDS on proportionate basis, even though the assessee has offered the income in total for the year under consideration. The reasons for the Assessing Officer to allow proportionate TDS is difference in turnover as per Form 26AS and turnover reported in the books. The assessee has explained the said difference with the sales return. If we consider sale return, then the turnover declared by the assessee tallies with the turnover reported in Form 26AS with reference to TDS credit as per section 194 O of the Act. Although, these facts has been explained to the learned CIT (A), but the learned CIT (A) based on assumption and presumption rejected the explanation of the assessee on the ground that if at all sales turnover is there, then the assessee must have replaced with other goods or refund gross amount including TDS amount. In our considered view, the TDS has been deducted by the e-platform operators at the time of sales whereas the money is returned to the buyer after e-platform operators

In the result, appeal filed by the assessee is allowed.