2026 (2) TMI 1049 - AT - Income Tax

TDS credit entitlement: full Form 26AS TDS must be allowed even if gross receipts were not fully assessed, for commission agents.

Where tax is deducted and reflected in Form 26AS in the assessee's name, the assessee is entitled to claim full credit of that TDS even if the gross ... Rectification u/s 154 - Denial of tax credit - CPC, while processing the return of income u/s 143(1), allowed only proportionate credit on the ground that gross receipts on which TDS was deducted was not fully offered to Tax - assessee has acted as a Kaccha Arhtia only HELD THAT:- The assessee receives payment on behalf of the others and offer commission from such activity. Thus, the full gross receipts as reflected in Form 26AS may not be offered to tax since only commission income would constitute revenue for the assessee. The differential receipts would never be offered to tax as revenue receipts. TDS has been deducted against assessee’s payment and it is the assessee’s money which has been deducted by the payers. Therefore, the credit of the same would certainly be available to the assessee. The turnover or other financial results are not in dispute. The provisions under which TDS has been deducted would not hold much relevance in such a case. Therefore, CPC is directed to grant full TDS credit to the assessee as available in Form 26AS. Assessee appeal allowed. Issues: Whether the assessee is entitled to full credit of tax deducted at source as reflected in Form 26AS where CPC granted only proportionate credit in the intimation under section 143(1) and rectification under section 154 was rejected.Analysis: The dispute concerns denial of full TDS credit shown in Form 26AS on the ground that the gross receipts against which TDS was deducted were not fully offered to tax in the assessee's profit and loss account. The assessee acted as a commission agent (kachcha arhtia) receiving payments on behalf of others and offering only commission income to tax, while TDS was nevertheless deducted on payments made to the assessee. The intimations under section 143(1) and the rectification order under section 154 arose from the same grievance of denial of full TDS credit. The technical objection that separate appeals should have been filed against the section 143(1) intimation and the section 154 rectification was held to be incorrect because both intimation and rectification related to the same substantive denial of TDS credit. Given that the tax was deducted from amounts attributable to the assessee (as reflected in Form 26AS) and that only commission income is assessable while the deducted amounts remain the assessee's money for which credit has been given by deductors, the appropriate remedy is to allow the TDS credit as reflected in Form 26AS. The Tribunal directed the processing authority to grant full TDS credit accordingly.Conclusion: The appeal is allowed and the assessee is entitled to full credit of TDS as shown in Form 26AS; the intimation and rectification shall be treated consistent with granting full TDS credit to the assessee.Ratio Decidendi: Where tax has been deducted and reflected in Form 26AS in the name of the assessee, the assessee is entitled to credit of such TDS notwithstanding that the gross receipts on which TDS was deducted are not offered to tax in full, particularly where the assessee is a commission agent and only commission income is assessable.