I sell on a marketplace. The operator deducted under section 194-O on my gross sales, but I reported turnover net of sales returns, and the CPC has allowed me only proportionate TDS credit under Rule 37BA. How do I get the rest?
By reconciling the difference and showing that the whole of the income relatable to the TDS credit has been offered to tax. The Tribunal held that the Assessing Officer had misunderstood the facts, that gross sales less sales returns tallied with the net turnover declared, and that the Assessing Officer ought to have allowed the full credit of Rs 1,62,412 as per Form 26AS; the Commissioner (Appeals)'s contrary reasoning was based on assumption and presumption, not on fact.
Decided by the ITAT (Shri Manjunatha, G., Accountant Member and Shri Ravish Sood, Judicial Member (order per Manjunatha, G., A.M.), Income Tax Appellate Tribunal, Hyderabad 'DB-A' Bench) on 2025-06-25, reported as ITA No. 568/Hyd/2025; Assessment Year 2023-24; date of hearing 23 June 2025, order pronounced 25 June 2025. It bears on section 194-O, section 143(1), section 199 of the Income Tax Act 1961, in TDS Defaults and Refunds, Interest & Condonation matters.
This is a structural mismatch, not a one-off error, and it will recur for every e-commerce seller. Section 194-O requires deduction on the gross amount of the sales; the seller's books and his return show turnover net of sales returns; Form 26AS therefore always shows a larger figure than the profit and loss account, and the automated processing at the Central Processing Centre reads that gap as unreported income and scales back the credit under Rule 37BA. The Tribunal's answer is the practical one: the tax was deducted by the platform at the moment of sale, and the money is refunded to the buyer after that deduction has already been made, so the deducted tax does not come back with the goods. The Commissioner (Appeals) had reasoned the other way — that a prudent businessman would not return the consideration without the element of TDS, so either the goods were replaced or the gross amount including the tax was refunded — and the Tribunal rejected that as presumption. Counsel's supporting point about section 52 of the Central Goods and Services Tax Act, that GST collection is on net value while income-tax deduction is on gross, was recorded as argument; it is not part of the holding and must not be cited as one.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee, an individual, carried on the business of retail trading of electronic appliances under the name M/s Keerti Electronics through e-commerce platform operators including Amazon Seller Service (P) Ltd and Reliance Retail Ltd. He filed his return for AY 2023-24 on 28 July 2023 declaring total income of Rs 8,43,290, reporting turnover of Rs 1,15,55,700 and business profit of Rs 6,94,235.83, and claiming credit for TDS of Rs 1,62,412 as per Form 26AS. The Assessing Officer at the Central Processing Centre, while processing the return and issuing an intimation under section 143(1), allowed credit of only Rs 1,38,211, relying on Rule 37BA of the Income-tax Rules, 1962 and observing that the assessee had reported total receipts of Rs 1,20,51,834 whereas total receipts as per Form 26AS from the various deductors were Rs 1,41,61,845, and therefore allowing TDS proportionately. On the Tribunal's findings, the turnover achieved through the operators was Rs 1,39,42,905.95, sales returns were Rs 23,87,202.48 and the net turnover declared was Rs 1,15,55,703.47. The Commissioner (Appeals), NFAC, Delhi dismissed the appeal on 19 December 2024, reasoning that where a sale is returned the money is refunded to the purchaser so the tax deducted may be adjusted against that purchaser, that no adjustment is required where the returned goods are replaced, and that no prudent businessman would complete a sales return by returning the consideration without the element of TDS. There was a delay of 29 days in filing the appeal to the Tribunal, which was condoned.
The appeal of the assessee was allowed. The assessee had reported the income relatable to the whole of the TDS credit of Rs 1,62,412 for the year under consideration; the Assessing Officer had misunderstood the facts in treating him as having reported only part of the turnover on which tax had been deducted; and once gross sales, sales returns and the net sales declared are taken together they tally with the total sales achieved through the e-commerce platform operators on which tax was deducted. The Assessing Officer therefore erred in allowing credit on a proportionate basis, and the order of the Commissioner (Appeals) was set aside with a direction to allow credit of Rs 1,62,412 as per Form 26AS (paragraphs 9, 10 and 11).
The Tribunal set out the working of section 194-O — the operator deducts at the time of credit or payment, whichever is earlier, on the gross amount of the sale or service — and identified the assessee as an e-commerce participant selling through Amazon Seller Services (P) Ltd and Reliance Retail Ltd (paragraph 9). It then found that the whole of the income relatable to the claimed credit had been offered to tax, and that the Assessing Officer had gone only by the turnover shown in the financial statement without giving effect to the reconciliation with sales returns (paragraph 10). On the Commissioner (Appeals)'s reasoning it held that the tax is deducted by the platform operators at the time of sale, whereas the money is returned to the buyer after the operators have already deducted, so the assumption that the assessee must either have replaced the goods or refunded the gross amount including the tax was presumption and not fact. Since the difference in turnover had been explained and the total income relatable to the credit had been offered to tax, full credit ought to have been allowed (paragraph 10).
Since the assessee has explained the reasons for difference in turnover and further made out a case that the total income pertains to TDS credit of Rs.1,62,412/- has been offered to tax for the year under consideration, in our considered view, the Assessing Officer ought to have allowed TDS of Rs.1,62,412/- as per Form 26AS.
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Handle my notice → Ask a CA on WhatsAppBy reconciling the difference and showing that the whole of the income relatable to the TDS credit has been offered to tax. The Tribunal held that the Assessing Officer had misunderstood the facts, that gross sales less sales returns tallied with the net turnover declared, and that the Assessing Officer ought to have allowed the full credit of Rs 1,62,412 as per Form 26AS; the Commissioner (Appeals)'s contrary reasoning was based on assumption and presumption, not on fact. This was decided by the ITAT (Shri Manjunatha, G., Accountant Member and Shri Ravish Sood, Judicial Member (order per Manjunatha, G., A.M.), Income Tax Appellate Tribunal, Hyderabad 'DB-A' Bench) and bears on section 194-O, section 143(1), section 199 of the Income Tax Act 1961. It is reported as ITA No. 568/Hyd/2025; Assessment Year 2023-24; date of hearing 23 June 2025, order pronounced 25 June 2025. This is a structural mismatch, not a one-off error, and it will recur for every e-commerce seller. Section 194-O requires deduction on the gross amount of the sales; the seller's books and his return show turnover net of sales returns; Form 26AS therefore always shows a larger figure than the profit and loss account, and the automated processing at the Central Processing Centre reads that gap as unreported income and scales back the credit under Rule 37BA. The Tribunal's answer is the practical one: the tax was deducted by the platform at the moment of sale, and the money is refunded to the buyer after that deduction has already been made, so the deducted tax does not come back with the goods. The Commissioner (Appeals) had reasoned the other way — that a prudent businessman would not return the consideration without the element of TDS, so either the goods were replaced or the gross amount including the tax was refunded — and the Tribunal rejected that as presumption. Counsel's supporting point about section 52 of the Central Goods and Services Tax Act, that GST collection is on net value while income-tax deduction is on gross, was recorded as argument; it is not part of the holding and must not be cited as one. If it applies to you, the first step is this: Build the reconciliation before you file: gross platform sales, less sales returns, equals net turnover in the books, and show that it ties to the gross figure in Form 26AS.
The assessee, an individual, carried on the business of retail trading of electronic appliances under the name M/s Keerti Electronics through e-commerce platform operators including Amazon Seller Service (P) Ltd and Reliance Retail Ltd. He filed his return for AY 2023-24 on 28 July 2023 declaring total income of Rs 8,43,290, reporting turnover of Rs 1,15,55,700 and business profit of Rs 6,94,235.83, and claiming credit for TDS of Rs 1,62,412 as per Form 26AS. The Assessing Officer at the Central Processing Centre, while processing the return and issuing an intimation under section 143(1), allowed credit of only Rs 1,38,211, relying on Rule 37BA of the Income-tax Rules, 1962 and observing that the assessee had reported total receipts of Rs 1,20,51,834 whereas total receipts as per Form 26AS from the various deductors were Rs 1,41,61,845, and therefore allowing TDS proportionately. On the Tribunal's findings, the turnover achieved through the operators was Rs 1,39,42,905.95, sales returns were Rs 23,87,202.48 and the net turnover declared was Rs 1,15,55,703.47. The Commissioner (Appeals), NFAC, Delhi dismissed the appeal on 19 December 2024, reasoning that where a sale is returned the money is refunded to the purchaser so the tax deducted may be adjusted against that purchaser, that no adjustment is required where the returned goods are replaced, and that no prudent businessman would complete a sales return by returning the consideration without the element of TDS. There was a delay of 29 days in filing the appeal to the Tribunal, which was condoned. The matter was decided on 2025-06-25 by the ITAT (Shri Manjunatha, G., Accountant Member and Shri Ravish Sood, Judicial Member (order per Manjunatha, G., A.M.), Income Tax Appellate Tribunal, Hyderabad 'DB-A' Bench). On those facts the ITAT held as follows. The appeal of the assessee was allowed. The assessee had reported the income relatable to the whole of the TDS credit of Rs 1,62,412 for the year under consideration; the Assessing Officer had misunderstood the facts in treating him as having reported only part of the turnover on which tax had been deducted; and once gross sales, sales returns and the net sales declared are taken together they tally with the total sales achieved through the e-commerce platform operators on which tax was deducted. The Assessing Officer therefore erred in allowing credit on a proportionate basis, and the order of the Commissioner (Appeals) was set aside with a direction to allow credit of Rs 1,62,412 as per Form 26AS (paragraphs 9, 10 and 11).
The Tribunal set out the working of section 194-O — the operator deducts at the time of credit or payment, whichever is earlier, on the gross amount of the sale or service — and identified the assessee as an e-commerce participant selling through Amazon Seller Services (P) Ltd and Reliance Retail Ltd (paragraph 9). It then found that the whole of the income relatable to the claimed credit had been offered to tax, and that the Assessing Officer had gone only by the turnover shown in the financial statement without giving effect to the reconciliation with sales returns (paragraph 10). On the Commissioner (Appeals)'s reasoning it held that the tax is deducted by the platform operators at the time of sale, whereas the money is returned to the buyer after the operators have already deducted, so the assumption that the assessee must either have replaced the goods or refunded the gross amount including the tax was presumption and not fact. Since the difference in turnover had been explained and the total income relatable to the credit had been offered to tax, full credit ought to have been allowed (paragraph 10). In the words reproduced by the source cited on this page: "Since the assessee has explained the reasons for difference in turnover and further made out a case that the total income pertains to TDS credit of Rs.1,62,412/- has been offered to tax for the year under consideration, in our considered view, the Assessing Officer ought to have allowed TDS of Rs.1,62,412/- as per Form 26AS."
It was decided by the ITAT on 2025-06-25 and is reported as ITA No. 568/Hyd/2025; Assessment Year 2023-24; date of hearing 23 June 2025, order pronounced 25 June 2025. 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 194-O, section 143(1), section 199, 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 appeal of the assessee was allowed. The assessee had reported the income relatable to the whole of the TDS credit of Rs 1,62,412 for the year under consideration; the Assessing Officer had misunderstood the facts in treating him as having reported only part of the turnover on which tax had been deducted; and once gross sales, sales returns and the net sales declared are taken together they tally with the total sales achieved through the e-commerce platform operators on which tax was deducted. The Assessing Officer therefore erred in allowing credit on a proportionate basis, and the order of the Commissioner (Appeals) was set aside with a direction to allow credit of Rs 1,62,412 as per Form 26AS (paragraphs 9, 10 and 11). It arises in TDS Defaults and Refunds, Interest & Condonation matters, on section 194-O, section 143(1), section 199 of the Income Tax Act 1961, and was decided by Shri Manjunatha, G., Accountant Member and Shri Ravish Sood, Judicial Member (order per Manjunatha, G., A.M.), Income Tax Appellate Tribunal, Hyderabad 'DB-A' Bench. 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 operator's month-by-month statement of gross sales and of returns, and keep the credit notes; the Tribunal decided this case on the arithmetic tallying, not on any principle. State positively that the income relatable to the whole TDS credit has been offered to tax for the year — that is the sentence the Tribunal turned on, and it is the answer to Rule 37BA. Meet the Revenue's point head on: the deduction happens at the point of sale and the refund to the buyer is made after the operator has already deducted, so the seller never gets the tax back. Take the point at the first appellate stage with documents, because a Rule 37BA restriction made at section 143(1) processing is not preceded by any opportunity to explain. For a period on or after 1 October 2024 remember that the rate is 0.1 per cent, not one per cent, so the absolute amounts in dispute will be smaller but the gross-versus-net mismatch is unchanged.
Still good law. Followed by the ITAT Delhi in Savadika Retail Private Limited v. Deputy Director of Income Tax, CPC, Bengaluru, ITA Nos. 2753 and 2754/Del/2025, order dated 7 November 2025: that Bench reproduced paragraphs 9 and 10 of this order, set aside the Commissioner (Appeals)'s order and directed full credit as per Form 26AS for AYs 2022-23 and 2023-24. It is also cited in Health & Happiness Private Limited v. DDIT, CPC, ITA No. 1990/Del/2025 (ITAT Delhi, 23 February 2026) — but that order has not been read in its own words, so nothing is stated here from it beyond the fact that the citation appears. No decision doubting or dissenting from this order has been located, and no systematic check of later treatment has been made. The rate of one per cent recited in the order was correct for AY 2023-24 and is now 0.1 per cent with effect from 1 October 2024, but the holding concerns credit under Form 26AS and is unaffected by the rate. No source could be cited for that finding. 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.
On the paragraph structure: the order runs ORDER, then numbered paragraphs 1 to 11, with the disposal at paragraph 11 ('In the result, appeal filed by the assessee is allowed'), followed by the signature block and the copy-to list. There are no sub-paragraphs and no quoted order with its own numbering, so the paragraph locators here are safe. Paragraphs 9 and 10 are corroborated by the ITAT Delhi order in Savadika Retail Private Limited v. DDIT, CPC, ITA Nos. 2753 and 2754/Del/2025, dated 7 November 2025, which reproduces them word for word in the course of following this decision. One evident slip in the source text that a reader must not take at face value: paragraph 5 as printed says 'The learned CIT (A) after considering the relevant provisions of Rule 37BA, rejected the argument of the Assessing Officer and upheld the reasons given by the assessee to allow the proportionate credit for TDS'. That is the wrong way round — the rest of the same paragraph and the disposal make clear that the Commissioner (Appeals) rejected the ASSESSEE'S argument, upheld the ASSESSING OFFICER'S proportionate credit, and dismissed the appeal. The rate stated in the order is one per cent, which was correct for AY 2023-24; it fell to 0.1 per cent with effect from 1 October 2024. Some reproductions of the order carry square-bracketed artefacts around section references ('[section 194 O]', 'Form 26[AS of the Act]'), so no quotation containing a section number has been taken from it; the sentence quoted below contains none. The figures reported by the Central Processing Centre (receipts of Rs 1,20,51,834 against Form 26AS receipts of Rs 1,41,61,845) do not exactly match the figures the Tribunal works with (gross Rs 1,39,42,905.95, returns Rs 23,87,202.48, net Rs 1,15,55,703.47); the difference is not explained in the order, and the Tribunal did not need to explain it because it decided the case on the returns reconciliation. 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 appeal of the assessee was allowed. The assessee had reported the income relatable to the whole of the TDS credit of Rs 1,62,412 for the year under consideration; the Assessing Officer had misunderstood the facts in treating him as having reported only part of the turnover on which tax had been deducted; and once gross sales, sales returns and the net sales declared are taken together they tally with the total sales achieved through the e-commerce platform operators on which tax was deducted. The Assessing Officer therefore erred in allowing credit on a proportionate basis, and the order of the Commissioner (Appeals) was set aside with a direction to allow credit of Rs 1,62,412 as per Form 26AS (paragraphs 9, 10 and 11).
TaxSphere, “Gopikishan Pallod v. ITO, Ward 7(1), Hyderabad (ITAT Hyderabad) — the Central Processing Centre cannot cut section 194-O credit proportionately because the platform deducted on gross sales while the seller reported net of returns”, https://taxnotice.vittsphere.com/caselaw/case/gopikishan-pallod-194-o-gross-tds-versus-net-turnover-proportionate-credit/ (validity last checked 2026-09-08)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
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I sell through a marketplace and the operator is deducting under section 194-O. What is the rate now, when does the five lakh exemption apply, and can the operator also deduct under section 194H or 194J on the same transaction?
My money is stuck. Every invoice I raise has tax deducted at the full rate, my actual tax for the year is far less than the deductions, and I only get it back a year later when the refund comes. Somebody told me to apply for a lower-deduction certificate under section 197. What does section 197 actually say — which payments does it cover, what does the Assessing Officer have to be satisfied about, what form do I file, and can the certificate be backdated to cover the deductions already made?
We run an e-auction platform. Buyers pay the sellers directly and no sale consideration passes through us. Are we still bound to deduct under s.194-O on the gross amount, and is there any way to raise the difficulty with the Board?
The faceless unit has disallowed my purchases for not deducting under s.194Q and has said nothing at all about the Board's circular I quoted in my reply. Is that enough to get the order set aside?
