Loading judgment…
Facts
The assessee filed an appeal against the order of the CIT(A) for assessment year 2022-23, which had upheld the disallowance of TDS credit. The assessee declared a total income of Rs.38,65,010/- and claimed TDS credit of Rs.8,70,450/-, of which Rs.1,21,669/- was allowed.
Held
The Tribunal held that the assessee acted as a commission agent ('Kacha Arhtia') and not a trader, and the TDS deducted by the buyers under Section 194Q was on purchases of agricultural produce sold on behalf of farmers. Therefore, the disallowance of TDS credit was incorrect.
Key Issues
Whether the disallowance of TDS credit claimed by the assessee, who acted as a commission agent, is justified when TDS was deducted by the buyers under Section 194Q.
Sections Cited
194Q, 194J, 37BA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’ CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI KRINWANT SAHAY
O R D E R PER RAJ PAL YADAV, VP
The assessee is in appeal against the order of the ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 29.12.2023 passed for assessment year 2022-23.
The Registry has pointed out that appeal is time barred by 356 days and there is a shortage in payment of Tribunal Fees by Rs.9500/-. The assessee has filed an application for A.Y.2022-23 2 condonation of delay. He has made up the deficiency of Tribunal fees. As far as delay is concerned, we find that assessee has filed an appeal before ITAT Bench, Delhi bearing ITA No.586/Del/2024. This appeal was filed well in time and it was dismissed by the Tribunal on the ground that jurisdiction over the assessee lies at Chandigarh, hence, after adjudication of appeal of the assessee by ITAT Delhi, assessee has filed the present appeal. Thus, the delay occurred on account of approaching wrong jurisdiction of the ITAT Bench, otherwise there was no deliberate attempt to make the appeal time barred. Accordingly, we condone the delay and proceed to decide the appeal on merit.
The assessee has taken six grounds of appeal
which contain two sub-grounds in Ground No.
5. However, solitary grievance of the assessee is that ld. CIT (Appeals) has erred in confirming the disallowance of TDS credit by CPC Bangalore.
4. The brief facts of the case are that assessee has filed his return electronically on 29.08.2022 declaring total income at Rs.38,65,010/-. He has claimed TDS credit of Rs.8,70,450/-. This claim was allowed to the extent of Rs.1,21,669/- and A.Y.2022-23 3 balance was disallowed. On appeal the ld. CIT (Appeals) has upheld the disallowance. The relevant finding of the ld. CIT (Appeals) reads as under : 4.5 The contention that the Appellant is only a commission agent is accepted. The ITR should exhibit a feature that the balance due from Sundry Debtors at the close of the FY should be restricted to the extent of commission/brokerage that is pending settlement and remains unpaid as on that date. However, in the case of the Appellant, the ITR illustrates that the quantum of Trade debtors balances at the close of the FY corresponds to the sales turnover that remains unpaid and due in respect of the sales made to such debtors at the close of the FY. Secondly, the TDS ought to have been deducted u/s.194J and not u/s.194Q if the contention that the Appellant is only a commission agent/broker were to be accepted. 4.6 in the case under consideration, as illustrated in the preceding paragraph, the trade debtors is not confined to the unrealised commission and therefore, it is established that the Appellant is a trader and not a broker/commission agent as claimed. Further, it is also observed that if the Appellant were truly a commission agent, the buyer of goods would have deducted TDS invoking the provisions of S.194J and not 194Q, which again strengthens that the goods have been purchased by such persons from the Appellant. Therefore, when it is established beyond doubt that the transactions undertaken by the Appellant during the year is in the nature of trade and not in the nature of a commission agent/broker, the adjustment made by the CPC invoking the provisions of rule 37BA is found to be in order and hence upheld.
5. Conclusion: In the result, the appeal of the Appellant is dis dismissed.”.
5. An identical issue has come up before this Bench in ITA No.44/CHD/2025. We have allowed the appeal and deleted the disallowance vide our order dated 09.07.2025. The discussion made by the Bench on this issue reads as under : 3. A perusal of copy of assessee’s financial statements as placed on Page Nos. 10 to 11 of the paper-book would show that the assessee is engaged in trading activities as well as it has earned commission income. The assessee act as a A.Y.2022-23 4 commission agent and it is duly registered with Haryana State Agricultural Marketing Committee / Board. As per assessee’s submissions to Ld. CIT(A), it could be seen that the assessee act as a Kacha Arhtia and he do not indulge in trading of its own but receives commission from the buyer. The sale proceeds are distributed to the farmers on whose behalf the assessee sells the goods. The assessee has sold the goods on behalf of the farmers to the buyers against I-form and the buyers have deducted TDS u/s 194Q. As per normal accounting practices, the assessee is liable to record commission income in its books of accounts instead of total value of goods sold as the assessee is not the owner of sold goods. In such a case, there would be no direct co-relation between the quantum of debtors and sales turnover.
4. In our considered opinion, the provisions of Sec.194Q do not determine the taxability of income in the hands of the recipient assessee. These provisions merely put on obligation on payer to deduct TDS on high value purchases. The said provisions target buyers with a specific turnover threshold, requiring them to withhold a portion of their payments as TDS. The purpose of the provisions is to improve the process of tax collection and ensure clear financial transactions. The specified buyers having turnover of more than Rs.10 Crores are required to deduct TDS while making purchases of more than Rs.50 Lacs from a single buyer. However, the gross turnover may not constitute real income of the assessee. The assessee, in the present case, act as a commission agent and sells agricultural produce on behalf of the farmers. The purchasers have deducted TDS while making purchases from the assessee. The assessee, as per statutory mandate, has offered commission income on these transactions. No case has been set up by Ld. CIT(A) that the assessee has concealed the gross sales / turnover or the same do not form part of assessee’s books of accounts. The assessee has reimbursed the sale proceeds to the farmers and earned commission out of the same. The Rule 37BA would have no applicability at all since it is not the case that the income arising out of these transactions would be offered to tax in multiple years. There is no dispute that these transactions form part of assessee’s books for this year. The TDS has been deducted qua the assessee and the same has duly been reflected in Form 26AS. In the absence of any allegation that any of the transactions as reflected in Form 26AS do not form part of assessee’s books for this year, full TDS credit could not be denied to the assessee. The Ld. AO is accordingly directed to allow full TDS credit to the assessee as available as per Form 26AS. We order so.
The appeal stand allowed in terms of our above order.”
In the light of above, if we examine the facts of the present case, then it would reveal, that assessee is also a ‘Kacha Arhtiya’ as discernable from the findings of the CIT (Appeals). The TDS has been deducted by the buyer of the A.Y.2022-23 5 agriculture produce u/s 194Q of the Act and assessee has claimed the credit of such TDS. Relying upon our finding, extracted supra, we are of the view that no disallowance ought to have been made and the total TDS credit claimed by the assessee deserves to be granted. Accordingly, we delete the disallowance and allow appeal of the assessee.
In the result, appeal of the assessee is allowed.
Order pronounced on 11.09.2025.