THE MALNAD ARECANUT SYNDICATE PRIVATE LIMITED ,SHIMOGA V. INCOME TAX OFFICER, WARD-1 & TPS, SHIMOGA

ITA 340/BANG/2025

AI Insights

The case revolves around the dispute concerning the non-granting of full TDS credit to the assessee, M/s. The Malnad Arecanut Syndicate Private Limited, by the Central Processing Center (CPC). The assessee, engaged in the business of dealing in arecanuts, claimed a TDS credit of Rs.7,76,965, which was partially granted only Rs.59,862 due to discrepancies noted between the TDS claimed and the income reported in the tax return. The assessee contested this decision, arguing that the income from which TDS was deducted under section 194Q of the Income Tax Act was not liable to tax and thus should not affect the TDS credit. The CIT(A) upheld the CPC's decision, leading to the assessee's appeal to the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705974 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2022-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: REVENUE; GANESH R. GHALE; STANDING COUNSEL REVENUE
• Assessee Lawyers: MADHU
• Keywords: TDS; FORM 26AS

Judgement Text

"IN INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI. LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND SHRI. PRAKASH CHAND YADAV, JUDICIAL MEMBER ITA No.340/Bang/2025 Assessment Year : 2022-23 M/s. The Malnad Arecanut Syndicate Private Limited, 12-13 A Block, A P M C Yar, Sagar Road, Shimoga, Shimoga – 577 204. PAN : AAACT 7297 F Vs. ITO, Ward – 1 AND TPS, Shimoga. APPELLANT RESPONDENT Assessee by : Shri. Madhu, Advocate Revenue by : Shri. Ganesh R. Ghale, Advocate, Standing Counsel for Revenue. Date of hearing : 02.07.2025 Date of Pronouncement : .07.2025 ORDER Per Laxmi Prasad Sahu, Accountant Member : This appeal filed by the assessee against the Order passed by the CIT(A) vide DIN and Order No.ITBA/APL/S/250/2024-25/1071513250(1) dated 24.12.2024, challenging the only issue regarding not granting full TDS credit of Rs.7,76,965/-. The CPC granted TDS credit of Rs.59,862/-. 2. Briefly stated, the facts of the case are that the assessee is a commission agent dealing in arecanuts and holds licence from the Agricultural Produce Marketing Committee. The assessee buys arecanuts from agriculturists whose income are exempt from tax and it is sold on auction to various traders and buyers ITA No.340/Bang/2025 Page 2 of 4 through auctions have deducted TDS as per section 149Q of the Act. The following TDS were made as under: Section Particulars Amount (Rs.) 194A of the Income Tax Act, 1961 (hereinafter called ‘the Act’) Interest 72,270/- 194H of the Act Commission 36,699/- 194Q Purchase 2,47,866/- 194I(b) 68,844/- Total 7,79,679/- 3. Assessee filed return of income on 19.11.2022 declaring total income of Rs.38,28,600/- as under, and claimed TDS as noted above : i. Income from House Property – Rs.4,44,807/- ii. Profit and Gains from Business/Profession – Rs.31,65,369/- iii. Income from Other Sources – Rs.2,18,422/- 4. The CPC issued defective notices to the assessee which were replied to but it was not considered and granted only TDS of Rs.59,862/- observing that the gross receipts shown in Form No.26AS on which credit for TDS has been claimed are higher than the total of receipts shown under all heads of income, in the return of income. Therefore, correct taxable income has not been offered to tax and accordingly as per Rule 37BA of the Act, the TDS credit qua disposed the receipts is only allowable. The assessee submitted that the sales from which tax is deducted under section 194Q of the Act is not liable to tax. Therefore, the turnover to be disclosed in the income tax return. In appeal before the learned CIT(A), the CIT(A) noted that the assessee works on value addition of the product so that the same can be sold at higher prices for earning more profit and he also discussed in detail the issue and observed that the assessee falls under the ITA No.340/Bang/2025 Page 3 of 4 category of pacca arahtia. Therefore, he should consider the total turnover / sales while determining actual income but in the case of the assessee, it has not been disputed by the AO and the turnover qua for which disputed by the AO and the turnover for which credit for TDS has been made not been taken into consideration while filing return of income and accordingly the assessee cannot claim tax credit for income which does not form part of his total income or turnover. Accordingly, he dismissed the appeal of the assessee. 5. Aggrieved from the above Order, assessee filed appeal before the Tribunal. The learned Counsel reiterated the submissions made before the lower authorities and submitted that the observation made by the CIT(A) is completely wrong. The entire turnover is reported under section 194Q of the Act are not the income of the assessee. The income part has been declared by the assessee. The total income declared by the assessee under profit and gains from business / profession of Rs.31,65,369/- which includes income earned on sale through actions to the buyers but the CIT(A) ignored this fact. The assessee has declared only income earned from different sources. The assessee has disclosed his income in terms of CBDT Circular No.452[F.No.201/3/85-IT(A-II)], dated 17.03.1986. 6. The learned DR relied on the Order of the lower authorities. 7. Considering the rival submissions, we noted that hear the dispute is only regarding not granting TDS observing that the corresponding turnover shown in Form 26AS is not declared in the return of income. On going through the acknowledgement of processing of return of income under section 143(1A) of the Ac, the assessee has declared income under the head profit and gains from business / profession of Rs.31,65,369/- and the total income declared is Rs.38,28,600/-. The CPC has accepted the return. We also observed that the learned CIT(A) has discussed the issue in detail and the CPC has processed the ITA No.340/Bang/2025 Page 4 of 4 return but the corresponding turnover has not been added as income of the assessee. Only the TDS has not been given. The observation made by the CPC as well learned CIT(A) is perverse that the income has not been disclosed in the return. The assessee’s income declared under profit and gains from business / profession is more than the TDS claimed by the assessee. Therefore, as per Rule 37BA r.w.s. 199 of the Act, the assessee is eligible for TDS credit. Accordingly, the TDS credit is to be allowed to the assessee. The AO is directed to give TDS credit after due verification. 8. In the result, appeal filed by the assessee is allowed. Pronounced in the court on the date mentioned on the caption page. Sd/- Sd/- Sd/- (PRAKASH CHAND YADAV) (LAXMI PRASAD SAHU) Judicial Member Accountant Member Bangalore, Dated : .07.2025. /NS/* Copy to: 1. Appellant 2. Respondent 3. Pr.CIT4.CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. "