Case Law Details
Kanjula Rajagopal Reddy Firm Vs ITO (ITAT Visakhapatnam)
In this case, the Income Tax Appellate Tribunal (ITAT) ruled in favor of the assessee, Kanjula Rajagopal Reddy Firm, against the Income Tax Officer (ITO). The dispute arose from the treatment of Tax Deducted at Source (TDS) by the assessing officer (AO), who restricted the claim of TDS made by the assessee under Rule 37BA of the Income Tax Rules, 1962.
The ITAT noted that the assessee acted as a commission agent (kaccha arahtia) in an Agricultural Market Committee Yard in Guntur, Andhra Pradesh. Therefore, the turnover of the assessee should only include the gross commission earned, according to Circular No. 452 issued by the Central Board of Direct Taxes (CBDT) on March 17, 1986. This circular clarified that for kaccha arahtias, turnover does not include sales made on behalf of principals; only the gross commission should be considered for tax purposes.
Given that the assessee was categorized as a commission agent (kaccha arahtia) and was entitled to have only the gross commission included in their turnover for tax purposes, the ITAT concluded that the assessee was eligible to receive credit for the entire amount deducted as TDS. Therefore, the ITAT set aside the orders of the lower revenue authorities and directed the AO to grant credit for the entire TDS amount.
As a result, the appeal of the assessee was allowed by the ITAT.
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