TaxTMI 
TaxTMI 
2026 (7) TMI 813
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....s such other order as this Hon'ble Court deems fit and proper in the interest of justice and equity." 2. A perusal of the material on record will indicate that in pursuance of the petitioner filing IT returns for the assessment year 2023-24 on 31.12.2023, the case of the petitioner was selected for scrutiny on 19.06.2024 and a query was raised as regards verification of business purchases made by the assessee and no TDS was deducted under 194Q of the Income Tax Act, 1961 (for short 'the I.T. Act') and Huge liabilities as compared to low income / receipts by issuing of statutory notices. In pursuance of the same, petitioner filed details on 16.08.2024, 05.09.2024 and 13.11.2024 and also submitted its reply and details on 02.12.2024 and 02.11.2024, despite which, the respondents passed the impugned order at Annexure-A dated 18.02.2025 followed by penalty notice at Annexure-A1, aggrieved by which, the petitioner is before this Court by way of the present petition. 3. Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record. 4. In addition to reiterating the various contentions urged in the petition and referring to th....
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.... provisions of section 194-O and sub-section (1H) of section 206C of the Act using power contained in sub-section (4) of section 194-O of the Act and sub-section (I-I) of section 206C of the Act. 4. Guidelines 4.1 Applicability on transactions carried through various Exchanges: 4.1.1 It has been represented that there are practical difficulties in implementing the provisions of Tax Deduction at Source (TDS) contained in section 194-Q of the Act in case of certain exchanges and clearing corporations. It has been stated that sometime in these transactions there is no one to one contract between the buyers and the sellers. 4.1 .2 In order to remove such difficulties, it is provided that the provisions of section 194Q of the Act shall not be applicable in relation to,- i) transactions in securities and commodities which are traded through recognized stock exchanges or cleared and settled by the recognized clearing corporation, including recognized stock exchanges or recognized clearing corporation located in International Financial Services Centre; (ii) transactions in electricity, renewable energy certificates and energy saving cer....
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....mount of sale consideration. However, the situation is different so far as TDS is concerned. It has been clarified in circular no 23 of20 17 dated 19th July 2017 as under: "wherever in terms of the agreement or contract between the payer and the payee, the component of 'GST on services' comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid or payable without including such 'GST on services' component. GST for these purposes shall include Integrated Goods and Services Tax, Central Goods and Services Tax, State Goods and Services Tax and Union Territory Good~ and Services Tax." 4.3.2 Accordingly with respect to TDS under section 194Q of the Act, it is clarified that when tax is deducted at the time of credit of amount in the account of seller and in terms of the agreement or contract between the buyer and the seller, the component of GST comprised in the amount payable to the seller is indicated separately, tax shall be deducted under section 194Q of the Act on the amount credited without including such GST. However, if the tax is deducted on payment b....
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.... any other Act passed by the Parliament (Like RBI Act, ADB Act etc.). 4.5.3 The above clarifications would not apply if only part of the income of the person (being a seller or being a buyer, as the case may be) is exempt. 4.6 Whether tax is to be deducted on advance payment? 4.6.1 It is requested to clarify if the provisions of section 194Q of the Act shall apply to advance payment made by the buyer. It is clarified that since the provisions apply on payment or credit whichever is earlier, the provisions of section 194Q of the Act shall apply to advance payment made by the buyer to the seller. 4.7 Whether provisions of section 194Q of the Act shall apply to buyer in the year of incorporation? 4.7.1 It is requested to clarify if the provisions of section 194Q of the Act shall apply to a buyer in the year of its incorporation. It is clarified that under section 194Q of the Act a buyer is required to have total sales or gross receipts or turnover from the business carried on by him exceeding ten Crore rupees during the financial year immediately preceding the financial year in which the purchase of good is carried out. Since this condition....
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....d to tax deduction under section 194Q of the Act. (ii) Though sub-section (IH) of section 206C of the Act provides exemption from TCS if the buyer has deducted tax at source on goods purchased by him, to remove difficulties it is clarified that this exemption would also cover a situation where instead of the buyer the e-commerce operator has deducted tax at source on that transaction of sale of goods by seller to buyer through e-commerce operator. (iii) If a transaction is both within the purview of section 194-O of the Act as well as section 194Q of the Act, tax is required to be deducted under section 194-O of the Act and not under section 194Q of the Act. (iv) Similarly, if a transaction is both within the purview of section 194-O of the Act as well as sub-section (1H) of section 206C of the Act, tax is required to be deducted under section 194-O of the Act. The transaction shall come out of the purview of sub- section (1H) of section 206C of the Act after tax has been deducted by the e-commerce operator on that transaction. Once the e-commerce operator has deducted the tax on a transaction, the seller is not required to collect the tax under sub-secti....