VIKAS MEHTA,NEW ANAJ MANDI, RANIA, SIRSA V. .THE DEPUTY DIRECTOR OF INCOME TAX CPC BANGALURU JOA INCOME TAX OFFICER, WARD-1, SIRSA, HARYANA

ITA 323/CHANDI/2024

AI Insights

The case involves an appeal by the assessee, Vikas Mehta, against the order of the CIT(A), Kolkata, which confirmed the action of the Deputy Director of Income Tax, CPC, Bangalore, in not allowing the TDS credit of Rs. 1,86,305 as per Rule 37BA of the Income Tax Act, 1961. The primary contention was whether the provisions of section 194Q of the Income Tax Act were applicable to the assessee, who acted merely as a commission agent (Kacha Arhtiya) and not as a seller of agricultural produce. The assessee argued that TDS should have been deducted under section 194H instead of section 194Q, as he was not the owner or seller of the goods but merely facilitated the sale by earning a commission.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 107784 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2022-2023
• Appeal Filed On: 29-03-2024
• Other Referred Cases: Madan Lai Gupta (ITA No. 192/JPR/2024)
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJEET KAUR
• Assessee Lawyers: SUDHIR SEHGAL
• Keywords: TDS; FORM 26AS
• Section: 143(1); 194C

Judgement Text

"आयकर अपीलीय अिधकरण,च᭛डीगढ़ ᭠यायपीठ “एस.एम.सी” , च᭛डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCHES, “SMC” CHANDIGARH HEARING THROUGH: HYBRID MODE ᮰ी िवᮓम ᳲसह यादव, लेखा सद᭭य BEFORE: SHRI. VIKRAM SINGH YADAV, AM आयकर अपील सं./ ITA No. 323/Chd/2024 िनधाᭅरण वषᭅ / Assessment Year : 2022-23 Vikas Mehta, M/s Suresh Kumar Vikas Kumar, New Anaj Mandi, Rania, Sirsa- Haryana-125076 बनाम The ITO Ward-1 Sirsa ᭭थायी लेखा सं./PAN NO: ADXPM1536D अपीलाथᱮ/Appellant ᮧ᭜यथᱮ/Respondent िनधाᭅᳯरती कᳱ ओर से/Assessee by : Shri Sudhir Sehgal, Advocate राज᭭व कᳱ ओर से/ Revenue by : Dr. Ranjeet Kaur, Sr. DR सुनवाई कᳱ तारीख/Date of Hearing : 17/09/2024 उदघोषणा कᳱ तारीख/Date of Pronouncement : 10/12/2024 आदेश/Order PER VIKRAM SINGH YADAV, AM This is an appeal filed by the Assessee against the order of the Ld. CIT(A), ADDL/JCIT(A)-4, Kolkata dt. 31/01/2024 pertaining to Assessment Year 2022-23. 2. In the present appeal, the assessee has raised the following grounds of appeal: 1. That the Ld. The Commissioner of Income Tax, ADDL/JCIT (A)-4, Kolkata has erred 1 confirming the action of the Ld. Deputy Director of Income Tax, CPC, Bangalore not allowing the TDS credited of Rs. 1,86,305/- as per Rule 37BA of the Income Tax Act. 1961. 2. That the Ld. The Commissioner of Income Tax, ADDL/JCIT (A)-4, Kolkata has erred in not considering that the TDS provision of section 194Q are not applicable on the appellant who it merely a Kacha Arhtiya/Pakka Arhtiya/Commission Basis. 3. That the Ld. The Commissioner of Income Tax, ADDL/JCIT (A)-4, Kolkata has erred in not considering the act that the assessee was mainly acting as commission agent/Kacha Arhtiya and he was earning 2 commission from the parties who has deducted TDS U/s 194Q implying that assessee has not made any sale to the said parties. 4. That the Ld. The Commissioner of Income Tax, ADDL/JCIT (A)-4, Kolkata has erred in confirming the action of Ld. Deputy Director of Income Tax, CPC, Bangalore which is against the facts and circumstances of the case and by not considering our detailed submission filed properly. 5. That the appellant craves leaves to add or amend the grounds of appeal before the appeal is finally disposed off. 3. During the course of hearing, the ld AR submitted that in the case of the assessee, ld DDIT, CPC Bangalore did not allow the credit of TPS deducted while processing the return of income u/s 143(1) of the Act on the alleged application of Rule 37BA of the Income Tax Rules, 1962 which is as under: S. No. Particulars Amount 1. Total receipts offered to tax under various heads (including receipts under Schedule El other than the Agricultural income part) in the return 15,55,853/- 2. Total Receipts as per Form 26 AS 9,56,82,197/- 3. Credit of TDS claimed by the assessee in the return of income 1,89,666/- 4. TDS Credit as per Rule 37BA: 1/2*3 3,084/- 4. It was submitted that the assessee is engaged in the business of commission agent of agriculture produce and as per the business model of the assessee, the assessee procures the agriculture produce from the farmers and thereafter, sell the same to various buyers and out of such arrangement, the assessee earns nominal amount of commission which has duly been shown by the assessee in his return of income filed for the AY 2022-23. It is hereby pertinent to mention here that the assessee is not the owner of the agriculture produce and hence, the assessee does not sell such goods on his own behalf rather the assessee only acts as a mediator/ agent and for such purpose, the assessee has obtained a registration from the Haryana State Agricultural Market Committee. The copy of the license is placed in the paper book at page no. 1-2. 3 5. It was submitted that the assessee thus acts as a 'Kacha Arhtiya' and various farmers bring their agricultural produce to a particular platform of a 'kacha arhtiya' licensed by local market committee. The 'kacha arhtiya' only acts as an agent of the farmers and is responsible for farmer's crop display, basic cleaning, sorting, conducting auction, receiving payments on behalf of farmers and then making such payments to farmers and thereby retains only the commission income. As an agent, the 'Kacha Arhtiya' does not trade of his own and his income is only the commission income fixed by the Agriculture Produce Market Commission and this commission is paid by the buyer of the agriculture produce. Hence, it is hereby submitted that the commission agent is not the owner of the goods and have no right to sell the goods rather, the farmers are the real owners who enjoy the right to sell such goods and receive consideration. 6. It was submitted that the 'Kacha Arhtiya' records only commission income earned by him in his books of account but not the actual purchase or sales in his books of account. Hence, only the commission income and the corresponding expenses incurred for earning such commission income are recorded by the 'Kacha Arhtiya' in his books of account. It was submitted that the Income Tax Department has clarified vide circular No. 452 [F. No. 201/3/85-IT(A-ll)] dated 17.03.1986 that the turnover of a 'Kacha Arhtiya' will only be the commission earned by the him and not the sales of agriculture produce. 7. It was submitted that the assessee has duly disclosed the commission income earned by him in the Profit & Loss A/c prepared for the year ending 31.03.2022, copy of the same is placed in the paper book at page no. 9. During the year under consideration, the assessee has declared total commission income including Dami to the tune of Rs. 11,88,385/- and the buyers deducted TDS u/s 194H of the Act @ 5% for payments made to the assessee for providing 4 services as commission agent i.e. Kacha Arhatia and the same is reflected in FORM 26AS which is placed in the paper book at page no. 10-14. 8. It was submitted that in the case of the assessee, a buyer namely M/s. Ebro India Private Limited has incorrectly deducted the TDS u/s 194Q of the Act on the incorrect understanding that the assessee is the actual seller of the agriculture produce without considering that the assessee is only a commission agent and on such commission amount paid, TDS u/s 194H of the Act should be deducted. However, in the case of the assessee, M/s. EBRO India Private Limited has deducted TDS u/s 194Q, 194H and 194C of the Act i.e. the deductor has deducted TDS u/s 194Q of the assessee incorrectly and for such incorrect deduction by the deductor, the assessee should not be held guilty particularly, when the assessee has duly proved that he is engaged in the activities of commission agent and due registration from HSAM has been obtained by the assessee. 9. It was further submitted that the CPC, Bangalore without considering different receipts as reflected in FORM 26AS has treated all the amounts as receipts of the assessee without making any bifurcation of TDS shown u/s 194Q of the Act and 194H of the Act. It was submitted that when the assessee is only a commission agent and not the actual seller, then provisions of section 194Q of the Act are not applicable on the assessee and therefore, the application of Rule 37BA of the Act in the case of the assessee is not valid. 10. Regarding the findings of the ld CIT(A) where he says that “as per the GST Return, the total supply is Rs. 11.68 Crores. But the same turnover is not disclosed in the ITR\", it was submitted that the ld CIT(A) has only considered that the assessee has shown gross receipts to the tune of Rs. 11.68 Crores however, he has failed to consider that there is corresponding amount of purchase and the commission earned on such sale/purchase is his income which has duly been 5 disclosed by the assessee in his books of account. Further, reliance was placed on the decision of the Coordinate Jaipur Bench in the case of Madan Lai Gupta (ITA No. 192/JPR/2024). 11. Per contra, the ld DR is heard has relied on the order of the lower authorities. It was submitted that there is nothing on record to demonstrate that the assessee has sold the goods on behalf of the farmers and therefore, in such circumstances, the CPC has rightly restricted the credit of TDS to the extent of receipts offered to tax and which has been duly confirmed by the ld CIT(A). 12. In his rejoinder, the ld AR submitted that given the opportunity, the assessee can demonstrate that he is only acting as the commission agent and has sold goods on behalf of the farmers and where the Bench so decide, the matter may be set-aside to the file of the AO for necessary examination and verification. The ld DR didn’t oppose where the matter is set-aside to the file of the AO. 13. I have heard the rival contentions and purused the material available on record. The limited issue under consideration relates to transaction undertaken by the assessee with M/s. Ebro India Private Limited wherein the latter had deducted TDS u/s 194Q of the Act. As per the contention of the ld AR, the said transaction relates to sale of the agriculture produce on behalf of the farmers and as such, the assessee only acted as a commission agent and the TDS has been wrongly done u/s 194Q. It has been submitted that where the TDS has been wrongly done, the assessee cannot be penalized by non-grant of TDS credit which he has rightly claimed while filing the return of income wherein the commission income has been duly offered to tax. On the other side, the claim of the Revenue is that since receipts from M/s Ebro India Private Limited has been 6 reflected as part of revenues and offered to tax, the CPC has restricted the TDS credit. I find that there is not enough material available on record to decide the matter judiciously and in the fitness of the things, it would be appropriate that the matter is remanded to the file of the AO as also acknowledged and agreed by both the parties. The matter is accordingly set-aside to the file of the AO to examine the exact nature of transaction undertaken by the assessee with M/s. Ebro India Private Limited, the role of the assessee vis-à-vis the purchaser and seller(s) and determine the claim of credit so done u/s 194Q afresh as per law after providing reasonable opportunity to the assessee. 14. The appeal of the assessee is thus allowed for statistical purposes. (Order pronounced in the open Court on 10/12/2024 ) Sd/- िवᮓम ᳲसह यादव (VIKRAM SINGH YADAV) लेखा सद᭭य / ACCOUNTANT MEMBER AG Date: आदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to : 1. अपीलाथᱮ/ The Appellant 2. ᮧ᭜यथᱮ/ The Respondent 3. आयकर आयुᲦ/ CIT 4. आयकर आयुᲦ (अपील)/ The CIT(A) 5. िवभागीय ᮧितिनिध, आयकर अपीलीय आिधकरण, च᭛डीगढ़/ DR, ITAT, CHANDIGARH 6. गाडᭅ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "