No Denial of Sec. 194Q TDS Credit as ‘Kachha Arhatia’ Had No Domain Over Goods Sold to Principal Buyers

Case Details: Kamlesh Kumar Jain vs. DCIT - [2024] 167 taxmann.com 601 (Jaipur-Trib.)

Judiciary and Counsel Details

• Sandeep Gosain, Judicial Member
• Anoop Bhatia, CA for the Appellant.
•  Smt. Monisha Choudhary, Addl. CIT-DR for the Respondent.

Facts of the Case

The assessee was a “Kacha Aaratiya” selling agricultural produce on behalf of the farmer to the principal buyer. While processing the return, a demand was raised after the TDS credit claimed was disallowed by invoking Rule 37BA. The matter reached the Jaipur Tribunal.

ITAT Held

The Tribunal held that the turnover on which TDS was deducted under section 194Q was not the turnover of the assessee. Moreover, a “Kaccha Arhatiya” acts only as an agent for his constituent and never acts as principal. Therefore, the remuneration of “Kaccha Arhatiya” consists solely of commission, and he has no control over the profit and losses made by his constituents.

In the instant case, the amount invoiced by the assessee to the principal buyer and the value of goods transferred by the assessee to the farmer was exactly the same. Therefore, the turnover of “Kutcha Arhatiya” was merely the commission paid by the principal buyer, on which the principal buyer deducts TDS under section 194H and which had been duly shown as income in the return of income by the assessee.

It was held that the assessee was a “Kaccha Arhatia” and was duly registered as such with the Ramganj mandi, Kota. Perusal of the ‘vikray parchi’ issued at the mandi to the farmers and the corresponding invoice raised by the assessee to the principal buyer undoubtedly establishes the fact that the assessee had no control or margin in the sale facilitated by him and earns merely commission from such transactions. Assessee had no domain over the goods sold to the principle buyers

Therefore, the TDS deducted by such principle buyers by virtue of provisions of section 194Q was eligible to be claimed by the Kaccha Arhatiya in his ITR.

List of Cases Reviewed

• Madan Lal Gupta [IT Appeal No. 192 (JPR) of 2024, dated 30-3-2024](para 2.7) followed.