Case Law Details
Subba Reddy Mareddy Vs ITO (ITAT Visakhapatnam)
ITAT Visakhapatnam held that the assessee acted only as an agent (kaccha arahtia) and therefore it is eligible to get credit of the entire amount deducted as tax at source. Thus, there is no short fall of TDS as concluded by Revenue Authorities.
Facts- Assessee is an individual and carrying business as a commission agent by selling chillies on behalf of farmers under the name and style of M/s. Amarrnath Chillies Traders to registered dealers (GST Dealers). Assessee filed the return of income for the A.Y. 2022-23 on 21.09.2022 admitting a total income of Rs.9,35,130/-. The tax on total income declared worked out to Rs.67,881/-. A defective notice u/s. 139(9) of the Act dated 11.11.2022 was issued to the assessee by the Income tax Authority, CPC, Bengaluru. In response, assessee has not responded to the notice issued u/s. 139(9) of the Act. Thereafter, AO while processing the return of income u/s. 143(1) of the Act granted TDS only to the extent of Rs. 3,073/-as against Rs.1,24,286/- claimed by the assessee in the return of income.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Tribunal in the case of Yegneswari General Traders vs. ITO held that 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.
Held that we have no hesitation to set-aside the orders of the Ld. Revenue Authorities and direct 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.
FULL TEXT OF THE ORDER OF ITAT VISAKHAPATNAM
This appeal is filed by the assessee against the order of Learned Commissioner of Income Tax (Appeals), Addl / JCIT (A) – 2, Mumbai [hereinafter in short “Ld.CIT(A)”] vide DIN & Order No. ITBA/APL/S/250/2023-24/1059544334(1) dated 10.01.2024 for the A.Y.2022-23 arising out of order passed under section 143(1) of the Income Tax Act, 1961 (in short ‘Act’) dated 21.02.2023.
2. Brief facts of the case are that, assessee is an individual and carrying business as a commission agent by selling chillies on behalf of farmers under the name and style of M/s. Amarrnath Chillies Traders to registered dealers (GST Dealers). Assessee filed the returnof income for the A.Y. 2022-23 on 21.09.2022 admitting a total income of Rs.9,35,130/-. The tax on total income declared worked out to Rs.67,881/-. A defective notice under section 139(9) of the Act dated 11.11.2022 was issued to the assessee by the Income tax Authority, CPC, Bengaluru. In response, assessee has not responded to the notice issued under section 139(9) of the Act. Thereafter, the Ld. Assessing Officer [hereinafter in short “Ld. AO”] while processing the return of income under section 143(1) of the Act granted TDS only to the extent of Rs. 3,073/-as against Rs.1,24,286/- claimed by the assessee in the return of income.
3. On being aggrieved by Intimation of the Ld. AO, CPC passed under section 143(1) of the Act, assessee preferred an appeal before the Ld. CIT(A) and filed his submissions. After considering the submissions of the assessee, Ld. CIT(A) dismissed the appeal of the assessee.
4. On being aggrieved by the order of the Ld. CIT(A), assessee is in appeal before us by raising following grounds of appeal: –
“1. The order of the learned Commissioner of Income-Tax (Appeals) is erroneous both on facts and in law.
2. The learned Commissioner of Income-Tax (Appeals) erred in confirming the action of the Assessing officer in not allowing credit for the entire tax deducted at source.
3. The learned Commissioner of Income-Tax (Appeals) ought to have seen that in accordance with the provisions of Sec.199 the sum deducted under Chapter XVII-B is allowable to the person from whose income, the deduction was made.
4. The learned Commissioner of Income-Tax (Appeals) ought to have seen that the appellant proved beyond any amount of doubt that the tax was deducted at source from the income derived by him and the credit is allowable from the tax payable.
5. The learned Commissioner of Income-Tax (Appeals) ought to have seen that the appellant acting as an agent on behalf of the agriculturists sold goods to various persons and the said purchasers deducted tax at source and remitted to the account of the Government and the appellant is entitled for credit for the tax so deducted.
6. The learned Commissioner of Income-Tax (Appeals) erred in confirming the disallowance of TDS on the ground that the deductor has to modify the statement filed.
7. The learned Commissioner of Income-Tax (Appeals) ought to have considered the fact that the deductor acted as an agent of the Central Government in deducting tax at source and when the amount deducted was not correctly reflected in the return of income, the Assessing officer has to take necessary steps for rectifying the Form 26AS by instructing the deductor properly.
8. Any other ground that may be urged at the time of hearing.
5. At the outset, the Ld. Authorised Representative [hereinafter “Ld.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 Aarahtias is the commission charged and it does not include the sales affected on behalf of the principals. The Ld.AR strongly relied on the Board Circular (supra) and reiterated 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 under section 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 Thota Venkateswarlu vs. ITO in ITA No. 290/Viz/2024 (AY 2023-24), dated 27.08.2024. Therefore, the Ld. AR strongly relied on the decision of this Bench (supra) and pleaded that considering the similar facts and circumstances, the decision taken by the Bench in the case of Thota Venkateswarlu vs. ITO (supra) may be applied to the case of the assessee also.
6. Per contra, Ld. Departmental Representative [hereinafter in short “Ld.DR”] strongly relied on the orders of the Ld. Revenue Authorities and argued in support of the same.
7. We have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. We have also gone through the CBDT Circular No. 452, dated 17thMarch, 1986 (supra) relied on by the Ld.AR. Further, we have also perused the decision of this Tribunal in the case of Thota Venkateswarlu 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……….”
6. 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, Guntur which is formed under the rules and regulation of the Government of Andhra Pradesh. Therefore, the Circular issued by the CBDT (supra) squarely applies to the assessee and hence I am of the view that the assessee is acted only as an agent (kaccha arahtia) and therefore it is eligible to get credit of the entire amount deducted as tax at source and there is no short fall of TDS as concluded by the Ld. Revenue 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.”
8. 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 Thota Venkateswarlu 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.
9. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 25th November,2024.
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