Kachha Arthia not entitled to credit for TDS wrongly deducted against his PAN

Kachha Arthia not entitled to credit for TDS wrongly deducted against his PAN

In a recent judgment, ITAT has held that Kachha Arthia not entitled to credit for TDS wrongly deducted against his PAN

ABCAUS Case Law Citation:
ABCAUS 3919 (2024) (03) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in in not allowing credit of TDS deducted at source by the purchaser ignoring the fact that the assessee was only a Kachha Arthia and, therefore, not liable to pay tax on the alleged income.

The assessee was a Kachha Arthia i.e. he was facilitating the sales and purchases transactions on behalf of others in lieu of arhat or commission charges. The assessee filed its return of income declaring commission earned. He claimed full credit of Tax Deducted at Source (TDS) as appearing in Form 26AS.

However, the credit of TDS was denied by the CPC.

The CIT(A) observed that the assessee was merely a Kachha Arthia and was facilitating the sales and purchases transactions on behalf of others. One of the purchaser wrong deducted TDS against the PAN of the assessee.

The CIT(A) further observed that as per provisions of section 199 of the the Income Tax Act, 1961 (the Act) read with Rule 37BA(2), both income tax TDS are to be considered in the hands of the same person. The TDS had been wrongly made against the PAN of the assessee and credit of it ought to have not claimed by the assessee.

The CIT(A) further opined that the appellant assessee ought to have got the TDS certificates issued in the name of the clients in whose behalf he was acting as an agent or ought to have got the corrections made on the TDS statements filed by the purchasers.

Before the Tribunal, it was contended that being a Kachha Arthia, the assessee was not liable to TDS. Reliance was placed on CBDT Circular No. 452 dated 17.03.1986.

The Tribunal opined that undisputedly, the assessee was a Kachha Arthia and CBDT Circular No. 452 squarely applied to him. However, the assessee should not get benefit of tax erroneously deducted by the payer in as much as the assessee has not shown the same as its income.

In the result, the appeal of the assessee was dismissed.

Download Full Judgment Click Here >>

• Object of assessment proceedings is not to find empirically correct solution on every fact issue – HC
• Penalty u/s 270A deleted as assessee filed revised computation during scrutiny
• Penalty u/s 271B for unfilled column 40 in Tax Audit Report Form 3CD deleted by ITAT
• Merely ex-parte rectifying computation without amending assessment order not make it nullity- ITAT
• Once assessee discharges primary onus, it shifts to AO to bring evidence to contrary – ITAT