Ravi Parkesh Vs ITO (ITAT Chandigarh)
TDS Credit Cannot Be Denied to Commission Agent: Gross Receipts Irrelevant
The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) directed the Revenue to grant full credit of TDS to the assessee, holding that TDS deducted on gross receipts does not disentitle a commission agent from claiming credit, even if such gross amounts are not offered to tax.
In the present case, the assessee was acting as a Kachha Arhtia (commission agent), receiving sale proceeds from traders on behalf of farmers and retaining only commission income as taxable receipts. Some traders, however, deducted TDS under section 194Q on the entire gross amount, which was never the assessee’s income. CPC restricted the TDS credit by invoking Rule 37BA, on the ground that the gross receipts reflected in Form 26AS exceeded the income offered to tax.
The Tribunal relied on CBDT Circular No. 452 dated 17.03.1986, which clarifies that in the case of commission agents, only the commission constitutes income, and not the gross sale proceeds. It was held that once TDS is deducted in the assessee’s name, the credit cannot be denied merely because the corresponding receipts are not taxable in his hands. The provision under which TDS is deducted was held to be immaterial in such circumstances.
Accordingly, the ITAT set aside the orders of CPC and CIT(A) and directed the Assessing Officer to allow full TDS credit as reflected in Form 26AS. The appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
