TaxTMI 
TaxTMI 
2011 (6) TMI 399
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....ssessing officer for A.Y.2009-10 are that the assessee, an importer and dealer in recycled ferrous and non-ferrous metals, mainly brass and copper, sold the said recycled metals to manufacturers as well as to certain other traders. A survey action u/s. 133A of the Act was carried out at assessee's premises on 23-02-2010. It was revealed to the Income Tax Officer (TDS)-3, Jamnagar that the assessee sold scrap worth Rs. 2,83,22,756 and Rs. 7,49,31,721, in each case, for A.Ys 2009-10 and 2010-11 respectively. The A.O. further noticed that the assessee did not deduct tax at source on the said scrap sales. Therefore, the A.O. passed order u/s. 206C(6)/206C(7) of the Act whereby he demanded Rs. 3,17,214 for assessment year 2009-10 and Rs. 7,94,340 being 1% of the sale consideration and interest thereon from each assessee. On appeal, the C.I.T.(A) confirmed the order of the A.O. observing that it is not necessary that the assessee is liable to deduct tax at source u/s. 206C of the Act only in case where the assessee is a manufacturer. He was of the view that even a trader is subject to sec. 206C of the Act as title of the section is very clear that "Profits and gains from the business of ....
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....ed A.R. submitted that metal/scrap sold by the assessee was not generated as a result of any manufacturing or mechanical working of materials by the assessee. Therefore, as per Explanation (b) to sec.206C, the assessee was not required to deduct tax at source from the buyer. The interpretation of section has to be done literally along with the relevant Explanation and it is therefore, necessary to read the words "waste and scrap" together. The learned A.R. submitted relying upon the decision of Delhi High Court in the case of CIT v. Sumi Motherson Innovative Engg. Ltd. [2010] 195 Taxman 353 wherein it is held that the intention of the legislature is to be judged from the language used in the legislation that if the language is plain and unambiguous, effect is to be given without going behind the wisdom of the legislative and also regardless of the result. It is also a cardinal principle of interpretation of fiscal statutes that they should be construed strictly. The learned A.R. submitted that the issue is squarely covered in favour of the assessee by decision of ITAT, Ahmedabad Bench in the case of Navine Fluorine International Ltd., v. Asstt. CIT [2011] 45 SOT 86/10 taxmann.com 7....
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....nd other reasons. Even during the course of survey no such material was found and put on record based from which it can be said that the scrap/goods sold was of above nature. The main thrust of argument of the assessees is that they are only traders; they are not into any manufacturing activity which would yield any scrap; and what they sold, is not scrap as defined in Explanation (b) to section 206C of the Act. Whereas the case of the revenue is that the heading of provisions of section reads - "Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc."; and that a trader in scrap not necessarily be a manufacturer inasmuch as that the scrap sold by the assessees are also generated from manufacturing activities carried out by some manufacturers or otherwise. 8. In this backdrop, we move to analyse relevant provisions in the Act. Provisions of section 206C(1) read as below: "206C. (1) Every person, being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whicheve....
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....ead of section reads, "Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc." and therefore, the assessee cannot escape from the rigors of provisions of section 206(1) of the Act. We are not inclined to accept this proposition made out by the revenue. Had it been the intention of the legislature that every section has to be read by its heading only, then there is no case for the legislature to come out with the sections, sub sections, clauses, Explanations, etc. Therefore, the heading of a provision in the Act cannot override the section, its sub sections, clause, Explanations etc. In the case on hand, the word "scrap" is adequately explained in Explanation (b) to section 206C which, in our opinion, for the detailed reasons narrated above, exonerates the assessees before us from the ambit of provisions of section 206C(1) of the Act. The other reason attached by the CIT(A) while upholding the order of assessing officer is that the scrap sold by the assessee would have been come out of the manufacturing activities or the mechanical working of materials carried out by some other manufacturers or otherwise also. We are afraid, this, at the best....