BALA KRISHNA TRADERS,GUNTUR vs. INCOME TAX OFFICER, WARD-1(1), GUNTUR
Facts
The assessee, a licensed commission agent (kaccha arahtia), claimed TDS credit which was partially disallowed by the CPC during processing under Section 143(1). The disallowance occurred because the CPC applied Rule 37BA, treating the gross sale proceeds as the assessee's income instead of only the commission. The CIT(A) upheld this disallowance, leading to the appeal before the Tribunal.
Held
The Tribunal held that for a 'kaccha arahtia', turnover includes only gross commission and not sales effected on behalf of principals, as per CBDT Circular No. 452. Therefore, the CPC was not justified in applying Rule 37BA by treating gross sales as income, and the assessee was eligible for full TDS credit. The Tribunal set aside the lower authorities' orders, directing the AO to grant the entire TDS credit.
Key Issues
Whether TDS credit should be disallowed for a commission agent by applying Rule 37BA on gross sale proceeds, instead of actual commission income, for the purpose of tax assessment under the Income Tax Act.
Sections Cited
143(1), 194Q, 194A, 44AB, Rule 37BA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
PER S. BALAKRISHNAN, AM: The captioned two appeals are filed by the assessee against the orders of the Learned Addl / JCIT (A), Agra in Din & Order No. ITBA/APL/S/250/2024-25/1074613926(1), dated 18/03/2025 (ITA No. 302/Viz/2025) and ITBA/APL/S/250/2024-25/1074950048(1), dated 24/03/2025 (ITA No.303/Viz/2025) arising out of the orders passed U/s. 143(1) of the Income Tax Act, 1961 (in short “the Act”) dated 17/02/2023 and 08/01/2024 for the AYs 2022-23 and 2023-24 respectively. Since the facts and the issues raised in these appeals are identical, both these appeals are clubbed, heard together and disposed of in this consolidated order. Briefly stated the facts of the case are that the assessee
M/s. Balakrishna Traders is a licensed commission agent in Agricultural Market Yard Committee [AMYC], Guntur. The assessee filed its return of income for the AY 2022-23 on 17/10/2022 declaring a total income of Rs. 6,17,640/- wherein the assessee claimed TDS credit for Rs. 32,807/-. Thereafter, the Ld. AO, CPC while processing the return of income U/s. 143(1) of the Act granted TDS only to the extent of Rs. 5,552/- and disallowed the TDS credit of Rs. 27,255/- [Rs. 32,807 – Rs. 5,552] and passed the Intimation U/s. 143(1) of the Act on 17/02/2023. Aggrieved by the Intimation of the Ld. AO, CPC passed U/s. 143(1) of the Act, the assessee filed an appeal before the Ld. Addl / JCIT (A), Agra. On appeal, after considering the submissions of the assessee, the Ld. Addl/ ITA Nos. 302 & 303/Viz/2025 the assessee filed the present appeal before the Tribunal by raising the following grounds of appeal:
“1. The order of the Ld. CIT(A) is contrary to the facts and also the law applicable to the facts of the case.
The Ld. Addl/Jt. Commissioner of Income Tax (Appeals) ought to have directed the Assessing Officer to grant credit for entire amount of Rs. 24,501 that was deducted as tax at source U/s. 194Q of the Act from the commission income.
The Ld. Addl/Jt. Commissioner of Income Tax (Appeals) ought to have appreciated that the appellant is only a Commission Agent and therefore, the CPC is not justified in applying Rule 37BA by treating the gross sale proceeds as income of the appellant.
Any other grounds may be urged at the time of hearing.”
At the outset, the Ld. Authorized Representative [AR] submitted that the assessee is only a commission agent and therefore, the total gross sale proceeds cannot be treated as the income of the assessee and thereby the Ld. Revenue Authorities have erred in applying the Rule-37BA of the Income Tax Rules, 1962. The Ld. AR also submitted that as per the Circular No.452, dated 17th March, 1986 issued by the Central Board of Direct Taxes [CBDT] the actual turnover of the Kaccha ITA Nos. 302 & 303/Viz/2025 that since the assessee is only a commission agent, the assessee is eligible to get credit of the entire amount deducted as tax at source U/s. 194Q & 194A of the Act and therefore pleaded that the grounds raised by the assessee may be allowed. The Ld. AR further submitted that on identical facts and circumstances, the Hon’ble Tribunal has decided the case in favour of the assessee in the case of Gorla Srinivasa Reddy vs. ITO in ITA No. 503/Viz/2024 (AY 2023-24), dated 20/12/2024 and in the case of Sri Sai Kiran Traders vs. ITO in ITA No. 402/Viz/2024 (AY 2023-24), dated 30/10/2024. Therefore, the Ld. AR strongly relied on the decisions of this Bench (supra) and pleaded that considering the similar facts and circumstances, the decision taken by the Bench in the above cited cases may be applied to the case of the assessee also.
On the other hand, Ld. Departmental Representative [DR] ITA Nos. 302 & 303/Viz/2025 452, dated 17th March, 1986 (supra) relied on by the Ld. AR. Further, we have also perused the decision of this Tribunal in the case of Sri Sai Kiran Traders vs. ITO (supra), wherein the Tribunal has relied on the decision of this Bench in the case of Yegneswari General Traders vs. ITO in ITA No. 39/Viz/2024 (AY 2022-23) dated 18/03/2024. For the sake of reference, the relevant paras 5 & 6 of the Tribunal’s order dated 18/03/2024 (supra) are extracted herein below:
“5. I have heard both the sides and perused the material available on record as well the orders of the Ld. Revenue Authorities. I have also gone through the CBDT Circular No. 452, dated 17th March, 1986 (supra) relied on by the Ld. AR. For the sake of reference, the relevant portion of paragraph No.4 of the said Circular (supra) is extracted herein below:
“4. The Board are advised that so far as kaccha arahtias are concerned, the turnover does not include the sales effected on behalf of the principals and only the gross commission has to be considered for the purpose of 44AB. But the position is difference with regard to paccaarahtias……….”
From the above it is clear that Kaccha Arahtias turnover includes only the gross commission and not the sales effected on behalf of their principals. In the present case, it is a fact that the assessee is only a licensed commission agent in Agricultural Market Committee Yard, ITA Nos. 302 & 303/Viz/2025 Authorities. Accordingly, I hereby set-aside the orders of the Ld. Revenue Authorities and direct the Ld. AO to grant credit of the entire amount deducted as tax at source in the case of the assessee. The grounds raised by the assessee are allowed.”
Considering the identical facts and circumstances of the assessee’s case with that of the appeal decided by the Tribunal in the case of Yagneswari General Traders vs. ITO (supra) and in the case of Sri Sai Kiran Traders vs. ITO (supra), following the principle of consistency, we have no hesitation to set-aside the orders of the Ld. Revenue Authorities and direct the Ld. AO - CPC to grant credit of the entire amount deducted as tax at source in the case of the assessee. Thus, the grounds raised by the assessee are allowed.
In the result, appeal of the assessee is allowed.
With respect to the assessee’s appeal in ITA No. 303/Viz/2025 (AY 2023-24), the core issue raised by the assessee in its appeal for the AY 2023-24 is identical to that of the issue raised in the assessee’s appeal for the AY 2022-23, which is adjudicated in the foregoing paragraphs of this order. Therefore, our decision given on the assessee’s appeal for the AY 2022-23 (ITA No. 302/Viz/2025), mutatis mutandis applies to the assessee’s appeal for the AY 2023-24 (ITA No. 303/Viz/2025) also. Accordingly, the grounds raised by the assessee in its appeal for the AY 2023-24 are allowed.
In the result, both the appeals filed by the assessee are allowed. Order pronounced in the open court on 18th July, 2025. S (एस बालाकृष्णन) (रवीश सूद) (S BALAKRISHNAN) (RAVISH SOOD) न्यायिकसदस्य/JUDICIAL MEMBER लेखासदस्य/ACCOUNTANT MEMBER d/- Visakhapatnam, dated 18.07.2025. OKK/sps आदेशकीप्रनतनलनपअग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : Bala Krishna Traders, D.No. 22-6-148, Thunuguntla Complex, Thunuguntla Vari Street, Lalapeta, Guntur, Andhra Pradesh-522003. 2. रधजस्व/ The Revenue : Income Tax Officer, Ward-1(1), O/o, ITO, Lakshmipuram Main Road, Guntur, Andhra Pradesh- 522003. 3. The Principal Commissioner of Income Tax, नवभधगीयप्रनतनिनर्, आयकरअपीलीयअनर्करण,हैदरधबधद /DR,ITAT, Visakhapatnam.
The Commissioner of Income Tax 6. गधर्ाफ़धईल / Guard file
आदेशधिुसधर / BY ORDER
Sr. Private Secretary ITAT, Visakhapatnam.
