Tax Demand Deleted: ITAT Rules Section 206C Inapplicable for Tendu Leaves Sales at Second Stage, Relies on Circular 660.

The ITAT set aside the Ld. CIT(A)'s order, directing the AO to delete the tax demand imposed on the assessee, a partnership trading tendu leaves, for AYs 2006-07, 2007-08, and 2008-09. The ITAT concluded that Section 206C of the Act was inapplicable as the sales were at the second stage, covered by Circular No. 660 dated 15.09.1993, and purchasers provided necessary declarations.

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Issues Involved:
The common issue raised by the assessee is against the order confirming the imposition of tax for non-collection of tax at source u/s 206C(6)/206C(7) of the Act.

A.Y. 2006-07:
The assessee, a partnership concern trading tendu leaves, was found not to have collected tax on sales to six parties. The AO imposed a tax demand, which the Ld. CIT(A) upheld. However, the ITAT found that the assessee's case was covered by Circular No. 660 dated 15.09.1993, and set aside the order, directing the AO to delete the demand. The appeals for AYs 2007-08 & 2008-09 were also allowed based on the same issue decided for AY 2006-07.

The ITAT held that the provisions of Section 206C of the Act were not applicable to the assessee as the sales were made at the second stage, covered by Circular No. 660 dated 15.09.1993. The ITAT referred to various decisions supporting their conclusion, including Karnataka Forest Development vs. ITO, CIT vs. Siyaram Metal Udyog Pvt. Ltd., Satya Pal Amrik Singh & Co. vs. Union of India, M/s G. K. Traders vs. ITO, and KPG Entreprise vs. ITO. The ITAT emphasized that the purchasers had furnished declarations, and therefore, set aside the Ld. CIT(A)'s order and directed the deletion of the demand.

Separate Judgment by Judges:
No separate judgment was delivered by the judges in this case.

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