SRI LAKSHMI GENERAL STORES,GUNTUR vs. INCOME TAX OFFICER, WARD-1(1), GUNTUR

Facts

The assessee, a licensed commission agent for chillies, earned 2% commission on agricultural produce sales. Buyers deducted TDS under Section 194Q on the full sale value and under Section 194A on delayed payment interest. The assessee claimed full TDS credit from Form 26AS, but the AO and CIT(A) only allowed proportionate credit based on the commission income, contending that the entire sale value was not the assessee's income.

Held

The Tribunal ruled that since the entire income earned by the assessee (commission) was subjected to TDS under Sections 194Q and 194A and offered for tax, the conditions of Section 199 read with Rule 37BA(2) of the Income Tax Rules, 1962 were met. Relying on prior decisions, the Tribunal directed the Assessing Officer to allow the full TDS credit as per Form 26AS for both assessment years.

Key Issues

Whether a commission agent is entitled to full TDS credit deducted on the total transaction value when only the commission income is offered for taxation, or if only proportionate credit should be allowed.