PREM TRADING CO,KALANWALI vs. INCOME TAX OFFICER, SIRSA

The assessee in this appeal has raised the followings grounds of appeal:

“1. Under the facts and circumstances of the case, Ld. CIT(A) has erred in accepting the action of Ld. AO of disallowing credit of TDS amounting to Rs 67,970/- claimed by assessee by invoking provisions of Rule 37BA.

Under the facts and circumstances of the case, Ld. CIT(A) has failed to appreciate that the assessee, being a commission agent has only earned service charges/Dami for the services provided.

Under the facts and circumstances of the case, Ld. CIT(A) has erred in concluding that the TDS ought to have been deducted in the name of the farmers ignoring the fact that income of the farmers is not liable to tax and hence they are not liable to file income tax return.

The appellant craves leave to add, delete, modify/amend the above grounds of appeal”

A perusal of the above grounds of appeal would reveal that the assessee is aggrieved by the action of the ld. CIT(A) in confirming the disallowance made by the Assessing Officer by not giving credit of TDS of Rs.67,970/- observing that the assessee has not reflected the corresponding income in the return of income relating to the aforesaid TDS. Before the ld. CIT(A), the assessee explained that the assessee had duly accounted for the income of Rs.21,98,748/- relating to TDS deducted u/s 194H and 194C of the Act to the extent of Rs.52,852/- (Rs.48,352+4,500) so far as the remaining amount of TDS credit Rs.22,177 is concerned, Ms. Ashisha Mittal, ld. counsel for the assessee, has submitted that in fact the said TDS was deducted u/s 194Q of the Income Tax Act by the purchaser of the agricultural produce, which was sold through the assessee by these farmers, the assessee being Licenced Commission Agent (LCA). The ld. counsel has submitted that the assessee has paid the Prem Trading Co. v. ITO 3 entire sale consideration to the farmers including the amount of TDS deducted, as the farmers, being illiterate persons, insist for total payment. He has further submitted that the buyer was not supposed to deduct TDS on the agricultural income, however, he has deducted the same and the thus the assessee is entitled to claim the same as the assessee has passed on the entire amount to the farmers.

The ld. DR, on the other hand, has submitted that this issue requires verification from the Assessing Officer.

Considering the rival submissions, the entire matter is restored to the file of the Assessing Officer with a direction that the Assessing Officer will thoroughly examine the issue afresh. If the assessee has disclosed the receipts in his returned income relating to the TDS deducted 52852/-, the Assessing Officer will accordingly, give the credit/benefit of the same of the assessee. Relating the deduction of TDS by the buyer on the purchases of agricultural produce, the assessee will demonstrate to the Assessing Officer that the entire sale consideration has been passed on to the farmers, and if the assessee is able to do so, the credit of TDS Prem Trading Co. v. ITO 4 deducted will be given to the assessee, irrespective of the fact that the sale consideration belong to the farmers.

With the above observations, the appeal of the assessee is treated as allowed.