The Income Tax Appellate Tribunal ( ITAT ), Visakhapatnam recently directed an Assessing Officer ( AO ) to forgo the amount generated by Kaccha Arahtias from sales conducted for their Principal as part of their own turnover, while directing the grant of entire Tax Deducted at Source ( TDS ) collected by the Kaccha Arahtia.
ITAT was jointly hearing two Appeals both on similar issues and pertaining to the same Assessee for consecutive Assessment Years, and rendered their decision to be mutatis mutandis to both matters.
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The Appellant-Assessee, Lakshmi Sai Traders is a Kaccha Arahtia – commission agent functioning in the Agricultural Market Yard Committee [ AMYC ]. Assessee’s return of income for Assessment Year (A.Y.) 2022-23 declaring a total income of Rs.8,09,145/- while claiming TDS of Rs.1,14,160/-.
The TDS claimed by the Assessee was allowed in part by the Centralized Processing Centre ( CPC ), permitting TDS to the extent of Rs.11,172/- while intimating the Appellant of disallowance of TDS credit of Rs.1,02,988/-.
Aggrieved by the Intimation of the AO, the Appellant contested the same before the Joint Commissioner of Taxes (Appeals) who partly allowed the appeal, leading to the present appeal before ITAT.
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The Appellant cited grounds of erroneous decision by the CIT(A) in not directing the AO to grant credit for the entire amount claimed as TDS under Section 194Q of the Income Tax Act, 1961; further, the Assessee claimed that the CIT(A) ought to have considered the stature of the Appellant as a commission agent of the Principal and not applied Rule 37BA of the Income Tax Rules, 1962, treating the gross sale proceeds of the Appellant as the income of the Appellant.
The Authorized Representative ( AR ) appearing for the Appellant, GVN Hari averred before the Tribunal that the actual turnover generated by the Kaccha Arahtia is the commission charged by them and that it does not include the sales affected on behalf of the Principals.
In light of the Assessee’s position as a commission agent, the AR reiterated the Assessee’s eligibility to avail credit of the entire TDS amount citing the decision of the same Tribunal in Yagneswari General Traders vs. ITO (2024) owing to the similarity in facts and circumstances.
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The single-member Bench of ITAT constituted by Duvvuru RL Reddy, Judicial Member observed the relevance of the decision in Yagneswari (supra) wherein the Tribunal observed that the Kaccha Arahtias’ “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”.
Identifying the position of the Appellant as a licensed commission agent in the Agricultural Market Committee Yard, Guntur, ITAT proceeded to set aside the order of the Revenue Authorities while directing the AO to grant credit of the entire amount deducted as TDS, back to the Assessee.
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