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Facts
The assessee, M/s Nippon Audiotronix Private Limited, challenged the short allowance of TDS credit amounting to Rs. 31,33,777/- by the CPC during processing under section 143(1) of the Income Tax Act. This discrepancy arose because the turnover in Form 26AS was higher than in the Profit & Loss Account, as two major buyers deducted TDS under section 194Q on gross sales amounts inclusive of GST.
Held
The Tribunal set aside the order of the Ld. Addl./JCIT(A) and remanded the case back to the Assessing Officer (AO). The AO is directed to verify whether GST was separately indicated in the bills or if payment was made earlier than credit, and to confirm if TDS was indeed deducted on purchase values inclusive of GST, then allow the TDS credit after due verification as per CBDT Circular No.13 of 2021 (para 4.3.2).
Key Issues
1. Whether the CPC correctly restricted TDS credit based on turnover ratios from P&L and 26AS. 2. Whether TDS deducted under section 194Q on sale consideration inclusive of GST should be fully allowed, especially when GST is separately indicated.
Sections Cited
143(1), 194Q, 37BA(4), 143(1)(a)(ii), 139(9)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH, ‘E’: NEW DELHI
Before: SHRI MAHAVIR SINGH & SHRI BRAJESH KUMAR SINGH
3.1. Against the above order, the assessee is in appeal before us.
The ld. AR filed a written synopsis, which is reproduced as under:-
That the provisions of section 194Q of the Act, obligates a buyer of goods to deduct TDS of the seller @ 0.1% of their sales exclusive of taxes i.e. if sales value, say is Rs. 100/- + GST Rs. 18/-, TDS is deductible @ 0.1% on Rs.100/-.
That the CPC allowed TDS credit in the Intimation issued u/s 143 (1), as computed in the ratios of "Turnover as per Profit & Loss Statement and that shown in 26AS", resulting into short allowance of TDS credit in the amount of Rs.31,33,777/- as below: i.Total TDS credit claim as per ITR Rs.6.51 crores ii.Total turnover as per P & L Statement : Rs.2185 crores (copy of P & L Statement annexed) iii.Total turnover as per 26AS Rs.2295 crores (copy annexed) iv.TDS credit allowed (i x ii)/(iii) Rs.6.19 crores v.TDS credit short allowed (i-iv) RS.31.33 lakhs (Rs.31,33,777/-) That the turnover in 26AS is shown on the higher side by Rs.110 crores as compared to turnover shown in P & L A/c ,for the reason, mainly two parties as in para below, having deducted TDS u/s 194Q, on the assessee's sales to them on total bill amounts inclusive of GST, wherein GST amount was approx. Rs.131/- cores, resulting into reflection of higher turnover in 26AS by the said corresponding amount. That the confirmation of the said two parties, as in para below, filed before Ld. JCIT Appeal, confirming that they have deducted TDS on purchase values inclusive of GST, annexed at pages 27-30. That the figures of sales by assessee to these two parties as contained in Form 26AS, annexed at pages 32-34 (internal pages 1, 2 & 71 of Form 26AS) are as below: Name of purchaser of Total purchases (Rs.) TDS u/s 194Q goods (Rs.) Suzuki Motors Gujarat 324,37,98,067/- 32,43,826/- P. Ltd. Maruti Suzuki India 537,47,65,861/- 53,82,445/- Ltd.
The above sale is inclusive of GST @18% hence the correct figure of sales net of GST, are as below.
Name of Net purchase GST @ 18% Total Purchases Sr. purchaser of Value excluding including GST as No. Goods GST (Rs.) per 26AS (Rs.)
Suzuki Motors 274,89,81,412/- 49,48,16,655/- 324,37,98,067/- (A) Gujarat P. Ltd. Maruti Suzuki 455,48,86,322/- 81,98,79,539/- 537,47,65,861 (B) India Ltd. Total 730,38,67,734/- 131,46,96,194 861,85,63,928/-
Hence the correct figure of total sales ofRs.2295,94,14,329/-, as per 26AS as in para 2(iii) above, should be reduced by the amount of Rs.131,46,96,194/- being GST included therein, Net Rs.2164,47,18,135/-. Therefore, the TDS credit is allowable as below:- i) Total receipts in P & L A/c Rs.2185,42,34,910/- (copy anexted at page 31) ii) Total corrected receipts as per Rs.2164,47,18,135/- 26AS iii) TDS Credit claimed in the Rs.6,51,02,050/- return The total receipts in P & L account being more than the corrected amount in 26AS as above, therefore, the TDS credit is allowable in full.
6. That the CPC issued notice dt.24.11.2023 of defective return u/s 139 (9) of the Act based on the difference in turnover as shown in profit & loss statement and that shown in 26 AS, copy of notice and reply thereto annexed page 42-43, disallowance made in non-consideration of the same.
7. That the Ld. JCIT (A) disallowed the claim in complete non- consideration of the case facts, vide a non-speaking order, simply by placing reliance on following judgements, the ratios of which are not at all relevant to the present case facts. Chowranghee Sales Bureau Pvt. Ltd. (1973) 87 ITR 542 (SC) Jamnalla Narashimharao (1993) 200 ITR 588 (SC) CIT vs T. Naggi Reddy (1993) 202 ITR 253” 4.1. The Ld. AR also referred to the CBDT Circular No.13 of 2021 dated 30th June, 2021, in which in para no.4.3.2, the modalities of deduction of TDS u/s 194Q vis-a-vis the component of the GST has been spelt out.
According to the ld. AR since the GST was included in the respective bills and as confirmed by the two deductors namely M/s Suzuki Motors Gujarat Pvt. Ltd. and M/s Maruti Suzuki India Ltd. (as per documents placed on page no.27-30 of the paper book), that they had deducted TDS on purchase values inclusive of GST and since total receipts in P & L Account i.e. Rs.21,85,42,34,910/- being more than corrected amount in Form 26AS i.e. Rs.2164,47,18,135/- (as per the details mentioned by the assessee in its written submissions as above) pleaded that the short credit of TDS amounting to Rs.31,33,777/- was not justified and the same should be allowed in full i.e. Rs.6,5102,050/- as against Rs.6,19,68,273/- allowed by the CPC.
The ld. DR supported the orders of the authorities below.
We have considered the rivals submissions and perused the material available on record. In this regard, para no.4.3.2. of the CBDT Circular No.13 of 2021 dated 30th June, 2021 on the subject ‘Guidelines under section 194Q of the Income Tax Act, 1961’, is reproduced as below:-
“4.3.2. Accordingly with respect to TDS under section 194Q of the Act, it is clarified that when tax is deducted at the time of credit of amount in the account of seller and in terms of the agreement or contract between the buyer and the seller. the component of GST comprised in the amount payable to the seller is indicated separately, tax shall be deducted under section 194Q of the Act on the amount credited without including such GST. However, if the tax is deducted on payment basis because the payment is earlier than the credit, the tax would be deducted on the whole amount as it is not possible to identify that payment with GST component of the amount to be invoiced in future.” 6.1. In view of the above para, the deduction of TDS and the extent of allowance of the TDS credit is a subject matter of verification as to under which category the two buyers i.e. Suzuki Motors Gujarat P. Ltd. and Maruti Suzuki India Ltd. have made the payment to the assessee respectively, i.e. whether the GST was indicated separately in the respective bills as claimed by the assessee or whether the payment was made to the assessee by the purchaser was earlier than the credit. This has not been done either the CPC or by the Ld. Addl./JCIT(A)-2, Coimbatore, in this case. Further, the claim of the assessee that the two deductors i.e. M/s Suzuki Motors Gujarat Pvt. Ltd. and M/s Maruti Suzuki India Ltd. have deducted TDS on purchase values inclusive of GST also needs verification by the AO.
In view of the above facts and discussion, we, therefore, set-aside the order of the Ld. Addl./JCIT(A)-2, Coimbatore and restore the matter to the file of the AO for verification and to allow the TDS credit after due verification as mandated in para no.4.3.2. of the CBDT Circular (supra) and as per law after affording due opportunity of being heard to the assessee. Ground no.1 of the appeals is allowed for statistical purpose.
In the result, the appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open court on 18th November, 2024.