Tax was deducted in my PAN under s.194Q on the whole mandi turnover, but I am a kachha arahtiya and I only offer my commission to tax. CPC has cut my TDS credit down in proportion. Can I still claim the whole deduction?
Yes, on this order. A commission agent in the Bundi grain mandi declared commission receipts of Rs 2,94,975 and claimed TDS of Rs 2,37,479, of which Rs 74,072 had been deducted by purchasers under s.194Q on sale proceeds that belonged to the farmers; CPC allowed Rs 10,037 under s.143(1)(a) and the Commissioner (Appeals) upheld the withholding of the s.194Q component. The Jaipur SMC Bench held that once an amount has been deducted from the assessee's income and paid into the Government treasury against his PAN, credit cannot be refused on the ground that the deduction ought to have been made in somebody else's hands, and found no merit in the Commissioner (Appeals)'s reliance on s.199 read with rule 37BA(2). Note what this is not: the Tribunal did not decide any question about the scope or correct application of s.194Q, and expressly proceeded on the footing that the deduction may have been made wrongly.
Decided by the ITAT (Income Tax Appellate Tribunal, Jaipur Benches, 'SMC' Bench - Smt. Annapurna Gupta, Accountant Member, sitting alone) on 2026-06-25, reported as ITA Nos. 1820 and 1831/JPR/2025, Assessment Year 2022-23, Jaipur 'SMC' Bench - heard 22 June 2026, pronounced 25 June 2026; appeals against the order of the Addl/JCIT(A)-09, Mumbai dated 25 October 2025 under s.250. No reporter citation is stated on the source page.. It bears on section 199, section 37BA, section 194Q, section 143(1)(a) of the Income Tax Act 1961, in TDS Defaults, Assessment & Scrutiny and Refunds, Interest & Condonation matters.
This is a s.199 decision wearing s.194Q clothes, and that is the point of it. A kachha arahtiya's own turnover is his commission and nothing else, but the purchasers who buy through him deduct under s.194Q on the whole value of the goods and report the deduction against his PAN, so Form 26AS shows a deduction many times the size of the income in his return. CPC then restricts the credit to the proportion the return supports, and the appellate answer the department gives is the one the Commissioner (Appeals) gave here: s.199 and rule 37BA(2) put the income and the credit in the same hands, the income is the farmer's, so the credit is the farmer's, and the arahtiya should have filed the rule 37BA(2) declaration with the deductor and had the certificate issued in his clients' names or got the deductor's statement corrected. This order refuses that route and puts the taxpayer's case on a simpler footing - the money was taken out of his receipts and paid to the treasury as tax on his behalf, and at worst it is an excess deduction, which does not forfeit the credit. Practitioners should also know that the department's own 1961-to-2025 concordance maps s.194Q, s.194R and s.194S all to s.393 of the Income-tax Act 2025 (Tax to be deducted at source), with s.400 (power to relax) and s.402 (interpretation) alongside.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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Bhandari Bros of 17-A New Grain Mandi, Bundi is a kachha arahtiya - a commission agent whose work is facilitating the sale of agricultural produce on behalf of farmers and who is remunerated by adat or commission for arranging those sales. For assessment year 2022-23 it filed a return under s.139(1) declaring commission receipts of Rs 2,94,975 and claimed credit for TDS of Rs 2,37,479 deducted under s.194Q, s.194H and s.194A. Processing the return under s.143(1)(a), CPC took only the commission receipt into account for the purpose of TDS credit and gave proportionate credit of Rs 10,037, withholding Rs 2,27,442. The Commissioner (Appeals) - Addl/JCIT(A)-09, Mumbai - confirmed the intimation on the s.194Q component of Rs 74,072, holding that under s.199 read with rule 37BA(2) the income and the credit must be in the same hands, that the sales were the farmers' and not the assessee's, that the TDS had therefore been made wrongly in the assessee's PAN, and that the assessee ought instead to have filed a declaration with the deductor and had the certificates issued in his clients' names or the deductor's statements corrected, which he had not done despite a deficiency letter from CPC. On the balance of Rs 1,63,407 deducted under s.194A (Rs 32,341) and s.194H (Rs 1,31,066) he directed the Jurisdictional Assessing Officer to verify that the corresponding income had been offered before allowing the credit. Two appeals were filed against the same order; the assessee applied to withdraw ITA No. 1820/JPR/2025, the Departmental Representative agreed, and it was dismissed as withdrawn.
The Commissioner (Appeals)'s order denying the assessee the benefit of TDS deducted under s.194Q is not in accordance with law and the assessee is entitled to claim the benefit of it; ITA No. 1831/JPR/2025 was allowed and ITA No. 1820/JPR/2025 dismissed as withdrawn. The Tribunal did not disturb the finding that the deduction had been made wrongly in the assessee's hands - it held that the wrongness does not matter to the credit.
The Tribunal took two findings from the Commissioner (Appeals)'s own order as undisputed: that the assessee is a commission agent taxable on his commission and not on the turnover on which he earns it (para 5.2.1), and that the deduction under s.194Q was made by the purchaser of the goods (para 5.2.4), the Commissioner (Appeals) having gone on to hold that the deduction should have been made in the hands of the agriculturist or farmer who was the seller (para 5.2.5). On those facts the tax had in fact been deducted by the purchaser and deposited into the Government treasury against the assessee's PAN as reported in Form 26AS, and the Tribunal saw no reason why credit should be denied 'even if wrongly deducted in his hands'. It rejected the Commissioner (Appeals)'s s.199 and rule 37BA(2) reasoning outright: the deduction having been made from the assessee's income and paid over, it amounts to tax paid on his behalf as TDS, and credit cannot be refused because the deduction ought to have been made from somebody else. At most, the Tribunal said, this is a case of an excess amount of tax being deducted, more than the law required, in the assessee's case - and since the amount came out of his income and reached the treasury, he is within his rights to claim the benefit of it. No authority is cited anywhere in the reasoning.
I do not find any merit in this reasoning of the Ld. CIT(A). The fact that TDS has been deducted in the hands of the assessee rightly or wrongly is not disputed and as long as an amount has been deducted from the income of the assessee and paid to the Government Treasury as tax on behalf of the assessee, the assessee is entitled to claim benefit of the same by way of credit of taxation paid in advance.
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Handle my notice → Ask a CA on WhatsAppYes, on this order. A commission agent in the Bundi grain mandi declared commission receipts of Rs 2,94,975 and claimed TDS of Rs 2,37,479, of which Rs 74,072 had been deducted by purchasers under s.194Q on sale proceeds that belonged to the farmers; CPC allowed Rs 10,037 under s.143(1)(a) and the Commissioner (Appeals) upheld the withholding of the s.194Q component. The Jaipur SMC Bench held that once an amount has been deducted from the assessee's income and paid into the Government treasury against his PAN, credit cannot be refused on the ground that the deduction ought to have been made in somebody else's hands, and found no merit in the Commissioner (Appeals)'s reliance on s.199 read with rule 37BA(2). Note what this is not: the Tribunal did not decide any question about the scope or correct application of s.194Q, and expressly proceeded on the footing that the deduction may have been made wrongly. This was decided by the ITAT (Income Tax Appellate Tribunal, Jaipur Benches, 'SMC' Bench - Smt. Annapurna Gupta, Accountant Member, sitting alone) and bears on section 199, section 37BA, section 194Q, section 143(1)(a) of the Income Tax Act 1961. It is reported as ITA Nos. 1820 and 1831/JPR/2025, Assessment Year 2022-23, Jaipur 'SMC' Bench - heard 22 June 2026, pronounced 25 June 2026; appeals against the order of the Addl/JCIT(A)-09, Mumbai dated 25 October 2025 under s.250. No reporter citation is stated on the source page.. This is a s.199 decision wearing s.194Q clothes, and that is the point of it. A kachha arahtiya's own turnover is his commission and nothing else, but the purchasers who buy through him deduct under s.194Q on the whole value of the goods and report the deduction against his PAN, so Form 26AS shows a deduction many times the size of the income in his return. CPC then restricts the credit to the proportion the return supports, and the appellate answer the department gives is the one the Commissioner (Appeals) gave here: s.199 and rule 37BA(2) put the income and the credit in the same hands, the income is the farmer's, so the credit is the farmer's, and the arahtiya should have filed the rule 37BA(2) declaration with the deductor and had the certificate issued in his clients' names or got the deductor's statement corrected. This order refuses that route and puts the taxpayer's case on a simpler footing - the money was taken out of his receipts and paid to the treasury as tax on his behalf, and at worst it is an excess deduction, which does not forfeit the credit. Practitioners should also know that the department's own 1961-to-2025 concordance maps s.194Q, s.194R and s.194S all to s.393 of the Income-tax Act 2025 (Tax to be deducted at source), with s.400 (power to relax) and s.402 (interpretation) alongside. If it applies to you, the first step is this: Frame the ground under s.199, not under s.194Q. What carried this appeal is that tax deducted from the assessee's money and paid to the treasury is tax paid on his behalf whatever the deducting section, and whether or not the deduction was correctly made.
Bhandari Bros of 17-A New Grain Mandi, Bundi is a kachha arahtiya - a commission agent whose work is facilitating the sale of agricultural produce on behalf of farmers and who is remunerated by adat or commission for arranging those sales. For assessment year 2022-23 it filed a return under s.139(1) declaring commission receipts of Rs 2,94,975 and claimed credit for TDS of Rs 2,37,479 deducted under s.194Q, s.194H and s.194A. Processing the return under s.143(1)(a), CPC took only the commission receipt into account for the purpose of TDS credit and gave proportionate credit of Rs 10,037, withholding Rs 2,27,442. The Commissioner (Appeals) - Addl/JCIT(A)-09, Mumbai - confirmed the intimation on the s.194Q component of Rs 74,072, holding that under s.199 read with rule 37BA(2) the income and the credit must be in the same hands, that the sales were the farmers' and not the assessee's, that the TDS had therefore been made wrongly in the assessee's PAN, and that the assessee ought instead to have filed a declaration with the deductor and had the certificates issued in his clients' names or the deductor's statements corrected, which he had not done despite a deficiency letter from CPC. On the balance of Rs 1,63,407 deducted under s.194A (Rs 32,341) and s.194H (Rs 1,31,066) he directed the Jurisdictional Assessing Officer to verify that the corresponding income had been offered before allowing the credit. Two appeals were filed against the same order; the assessee applied to withdraw ITA No. 1820/JPR/2025, the Departmental Representative agreed, and it was dismissed as withdrawn. The matter was decided on 2026-06-25 by the ITAT (Income Tax Appellate Tribunal, Jaipur Benches, 'SMC' Bench - Smt. Annapurna Gupta, Accountant Member, sitting alone). On those facts the ITAT held as follows. The Commissioner (Appeals)'s order denying the assessee the benefit of TDS deducted under s.194Q is not in accordance with law and the assessee is entitled to claim the benefit of it; ITA No. 1831/JPR/2025 was allowed and ITA No. 1820/JPR/2025 dismissed as withdrawn. The Tribunal did not disturb the finding that the deduction had been made wrongly in the assessee's hands - it held that the wrongness does not matter to the credit.
The Tribunal took two findings from the Commissioner (Appeals)'s own order as undisputed: that the assessee is a commission agent taxable on his commission and not on the turnover on which he earns it (para 5.2.1), and that the deduction under s.194Q was made by the purchaser of the goods (para 5.2.4), the Commissioner (Appeals) having gone on to hold that the deduction should have been made in the hands of the agriculturist or farmer who was the seller (para 5.2.5). On those facts the tax had in fact been deducted by the purchaser and deposited into the Government treasury against the assessee's PAN as reported in Form 26AS, and the Tribunal saw no reason why credit should be denied 'even if wrongly deducted in his hands'. It rejected the Commissioner (Appeals)'s s.199 and rule 37BA(2) reasoning outright: the deduction having been made from the assessee's income and paid over, it amounts to tax paid on his behalf as TDS, and credit cannot be refused because the deduction ought to have been made from somebody else. At most, the Tribunal said, this is a case of an excess amount of tax being deducted, more than the law required, in the assessee's case - and since the amount came out of his income and reached the treasury, he is within his rights to claim the benefit of it. No authority is cited anywhere in the reasoning. In the words reproduced by the source cited on this page: "I do not find any merit in this reasoning of the Ld. CIT(A). The fact that TDS has been deducted in the hands of the assessee rightly or wrongly is not disputed and as long as an amount has been deducted from the income of the assessee and paid to the Government Treasury as tax on behalf of the assessee, the assessee is entitled to claim benefit of the same by way of credit of taxation paid in advance."
It was decided by the ITAT on 2026-06-25 and is reported as ITA Nos. 1820 and 1831/JPR/2025, Assessment Year 2022-23, Jaipur 'SMC' Bench - heard 22 June 2026, pronounced 25 June 2026; appeals against the order of the Addl/JCIT(A)-09, Mumbai dated 25 October 2025 under s.250. No reporter citation is stated on the source page.. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 199, section 37BA, section 194Q, section 143(1)(a), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Commissioner (Appeals)'s order denying the assessee the benefit of TDS deducted under s.194Q is not in accordance with law and the assessee is entitled to claim the benefit of it; ITA No. 1831/JPR/2025 was allowed and ITA No. 1820/JPR/2025 dismissed as withdrawn. The Tribunal did not disturb the finding that the deduction had been made wrongly in the assessee's hands - it held that the wrongness does not matter to the credit. It arises in TDS Defaults, Assessment & Scrutiny and Refunds, Interest & Condonation matters, on section 199, section 37BA, section 194Q, section 143(1)(a) of the Income Tax Act 1961, and was decided by Income Tax Appellate Tribunal, Jaipur Benches, 'SMC' Bench - Smt. Annapurna Gupta, Accountant Member, sitting alone. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Get the two facts the Tribunal treated as undisputed onto the record below, because it took both from the Commissioner (Appeals)'s own paragraphs: that the assessee is a commission agent taxable on commission alone, and that the s.194Q deduction was made by the purchaser on sale proceeds belonging to the farmers. Rely on CBDT Circular No. 452 dated 17 March 1986 for the proposition that a kachha arahtiya's turnover comprises only his commission. The Commissioner (Appeals) accepted that reading and the Tribunal proceeded on it; the Tribunal did not itself analyse the circular. Expect the answer that you should have filed the rule 37BA(2) declaration with the deductor and had the TDS certificates issued in the farmers' names. This order holds that not having done so does not cost the assessee the credit - but it is a single-member order and does not bind a Division Bench, so plead the declaration point in the alternative and, going forward, get the deductor's statement corrected anyway. Do not cite this for anything about s.194Q itself - the threshold, who is a buyer, the s.194Q(5) exclusions, or whether a purchase through a mandi agent attracts it at all. None of that was decided; the statutory text appears in the order only inside the extract from the Commissioner (Appeals)'s order.
Still good law. This is an order of the Income Tax Appellate Tribunal, and of a single-member SMC Bench at that, decided 25 June 2026. No search for later treatment - appeal, dissent, or a contrary bench - was carried out in this pass, and the Indian Kanoon page records the order as cited by none. It would be displaced by a decision of the Rajasthan High Court or any other High Court on the s.199 and rule 37BA(2) question, by a Division Bench of the Tribunal taking the contrary view (which a Division Bench is free to do, since a single-member order does not bind it), by a successful appeal under s.260A, or by an amendment to rule 37BA. Read it as one bench's view on a point on which no higher authority is recorded here, not as a settled position. That finding was checked against a published source, which is linked on this page, on 2026-09-05. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Read in full from the text of the order. Four things a reader should carry away about its weight and its edges. First, it is an 'SMC' order: a single member, and here an Accountant Member sitting alone, rather than the usual Division Bench of one Judicial and one Accountant Member. Single-member benches take cases within the monetary limit fixed for single-member disposal; the order does not state that limit or the figure that brought this appeal inside it. Such an order is a Tribunal order and is citable as one, but it is the least weighty form of one - it does not bind a Division Bench, and on a question of law a two-member order will be preferred to it. Second, the order turns on s.199 and rule 37BA(2), not on s.194Q. The Tribunal's own words are that whether the deduction was made in the assessee's hands 'rightly or wrongly is not disputed'; it decided nothing about when s.194Q bites, who the seller is on a mandi purchase, the fifty lakh and ten crore figures, or the s.194Q(5) carve-outs. Those provisions appear in the order only because the Commissioner (Appeals)'s order, extracted at para 7, reproduces them. Third, the reasoning at paras 8 to 10 addresses only the s.194Q component of Rs 74,072, yet para 11 allows the appeal and para 12 records ITA No. 1831/JPR/2025 as allowed; ground 2, against the direction to the Jurisdictional Assessing Officer to verify the income corresponding to the s.194A and s.194H deductions of Rs 32,341 and Rs 1,31,066 before allowing that credit, is nowhere discussed, so whether that direction survives is left unclear. Ground 3 is likewise not dealt with, and the Tribunal decisions the assessee is recorded as having relied on are not named anywhere in the order. Fourth, small slips: para 6 says CPC gave proportionate credit of 'Rs.10,000/-' where every other figure in the order and in the Commissioner (Appeals)'s findings is Rs 10,037; the order was pronounced on 25 June 2026 but is dated 26 June 2026 above the Senior PS's name, and the pronouncement date is taken here as the date of decision; and the Indian Kanoon page captions the matter 'Bhandari Bros,Bundi vs Bundi, Bundi', garbling the respondent, who the order itself names as the Income Tax Officer, Bundi. No reporter citation was found and none is claimed. It does not tell you whether s.194Q applies at all to a purchase of agricultural produce routed through a kachha arahtiya, who the 'seller' is in that structure, or whether the purchasers here were buyers within the Explanation to s.194Q(1) - the Tribunal expressly left the deduction as one made 'rightly or wrongly' and decided none of it. It does not decide that the deduction ought to have been in the farmer's name; it only holds that the possibility does not cost the assessee the credit. It says nothing about the obvious consequence - whether the farmer or seller can also claim credit for the same deduction, what happens if two people claim it, or how the department is to reverse a credit given twice - and nothing about rule 37BA(3)(i), which matches the credit to the year the income is assessable, a provision that sits awkwardly with allowing full credit against a fraction of the receipts. It does not mention s.198 or s.205. It does not itself analyse CBDT Circular No. 452 of 17 March 1986 or the kachha and pakka arahtiya distinction, taking the point from the Commissioner (Appeals)'s acceptance of it, and gives no guidance at all on a pakka arahtiya, on a commission agent who is not in agricultural produce, or on a case where the character of the agency is disputed. It does not consider whether an adjustment of this kind is within the scope of s.143(1)(a) in the first place, which is a separate and often stronger ground. It says nothing about interest under s.244A on the refund that follows. It leaves grounds 2 and 3 undiscussed, so it is no authority on the direction to verify the s.194A and s.194H credits. The general mechanics of who gets the credit and in which year are covered by the library's concept page on rule 37BA; this order is authority for one narrow proposition only, and from the weakest form of Tribunal bench. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Commissioner (Appeals)'s order denying the assessee the benefit of TDS deducted under s.194Q is not in accordance with law and the assessee is entitled to claim the benefit of it; ITA No. 1831/JPR/2025 was allowed and ITA No. 1820/JPR/2025 dismissed as withdrawn. The Tribunal did not disturb the finding that the deduction had been made wrongly in the assessee's hands - it held that the wrongness does not matter to the credit.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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