TDS credit for agent-led purchases remains available where commission is taxable income and transactions are properly established.

A Kachha Arhtia acting as an agent may claim credit for tax deducted under Section 194Q on principal-related purchases even though the gross purchase and sale values are not its turnover. As its taxable income is confined to commission and the underlying transactions and TDS deduction are reflected in its account, non-disclosure of gross transaction values as turnover does not bar the credit. TDS credit for interest and commission under Sections 194A and 194H is also allowable where the corresponding income is recorded and reconciled without identified discrepancies. The article states that the full TDS-credit claims were accepted and related adjustments removed.

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Issues: (i) Whether a Kachha Arhtia is entitled to credit of tax deducted at source under Section 194Q on transactions undertaken for its principal, notwithstanding that the gross purchase and sale value is not its turnover; (ii) Whether tax deducted at source under Sections 194A and 194H was allowable where the corresponding interest and commission income was accounted for.

Issue (i): Whether a Kachha Arhtia is entitled to credit of tax deducted at source under Section 194Q on transactions undertaken for its principal, notwithstanding that the gross purchase and sale value is not its turnover.

Analysis: A Kachha Arhtia acts as an agent in procuring goods from farmers for the principal and raises invoices for equivalent amounts to the principal. The purchase and sale amounts undertaken on the principal's behalf do not constitute the agent's turnover; its income is the commission. Deduction under Section 194Q on the principal's payment for purchase of goods does not disentitle the agent from TDS credit merely because the gross transaction value was not disclosed as its turnover.

Conclusion: The assessee was entitled to credit of TDS deducted under Section 194Q; the disallowance of that credit was deleted in favour of the assessee.

Issue (ii): Whether tax deducted at source under Sections 194A and 194H was allowable where the corresponding interest and commission income was accounted for.

Analysis: The TDS claims relating to interest and commission were supported by the accounts and reconciliation of the corresponding income. No discrepancy was identified in the assessee's accounting of those amounts.

Conclusion: The assessee was entitled to TDS credit under Sections 194A and 194H; disallowance of those credits was deleted in favour of the assessee.

Final Conclusion: The assessee's full TDS-credit claims for both assessment years were accepted, removing the adjustments made against those credits.

Ratio Decidendi: An agent whose taxable turnover is confined to commission income remains entitled to credit for tax deducted at source on principal-related purchase transactions when the deduction is reflected in the agent's account and the underlying transactions are established.

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