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Facts
The assessee appealed against a rectification order under Section 154 that restricted TDS credit for AY 2022-23. The CPC allowed a lower TDS credit of Rs. 28,975/- against Rs. 3,59,762/- claimed, citing Rule 37BA and discrepancies with Form 26AS. The assessee, a 'Kachha Arhtia', argued that only commission income, not gross receipts, should be considered for taxability, a claim rejected by the CIT(A).
Held
The Tribunal found that the assessee indeed acted as a 'Kachha Arhtia', receiving payments on behalf of farmers, and that commission income formed its actual earnings. Although some traders deducted TDS under Section 194Q on gross receipts not belonging to the assessee's income, the Tribunal ruled that the TDS was on the assessee's money and therefore full TDS credit should be granted. The Assessing Officer was directed to allow the full TDS credit.
Key Issues
Entitlement to full TDS credit for a 'Kachha Arhtia' on gross receipts where TDS was deducted under Section 194Q, despite only commission being taxable and discrepancies with Form 26AS.
Sections Cited
Section 154, Rule 37BA, Section 194Q
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Income Tax Appellate Tribunal, “SMC” BENCH, CHANDIGARH
O R D E R
Aforesaid appeal by assessee for Assessment Year (AY) 2022- 23 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 15-07-2025 in the matter of an rectification intimation issued by CPC u/s 154 of the Act on 11-03- 2023. The sole grievance of the assessee is allowance of TDS credit. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.
Upon perusal of rectification order dated 11-03-2023, it could be seen that CPC allowed TDS credit of Rs.28,975/- as against Rs.3,59,762/- as claimed by the assessee. The same was on the ground that in terms of Rule 37BA, total receipts as offered by the assessee to tax was less than receipts as reflected in Form 26AS by various deductor while deducting TDS on various transactions with the assessee. During first appeal, it was explained by the assessee that it acted as Kachha Arhtia (Commission agent) and the assessee was providing services to farmers for sale of their crops to traders etc. The payment so received is transferred to farmers against commission. As per CBDT Circular No.452 dated 17-03-1986, only commission income would constitute business receipts of the assessee. However, Ld. CIT(A) rejected the said claim and upheld the action of CPC. Aggrieved, the assessee is in further appeal before us.
From assessee’s pleadings, it could be seen that the assessee has acted as Kaccha Arhtia only. The assessee receives payment from traders on behalf of the farmers against commission income. The commission receipts become the income of the assessee. However, few of the traders have deducted TDS u/s 194Q against gross receipts which are not the receipts for the assessee. These receipts would never be offered as revenue receipts. Nevertheless, TDS has been deducted against assessee’s payment and it is the assessee’s money which has been deducted by the traders. Therefore, the credit of the same would certainly be available to the assessee. The turnover or other financial results are not in dispute. The provisions under which TDS has been deducted would not hold much relevance in such a case. Therefore, I direct Ld. AO to grant full TDS credit to the assessee as available.
The appeal stands allowed. Order pronounced on 07th January, 2026.