2019 (9) TMI 1125

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....fficer (AO) under s. 206C(1) r.w.s. 206C(6), 206C(6A) and 206C(7) of the Income-tax Act, 1961 (the Act) concerning A.Y. 2008-09. 2. The Revenue in its appeal has challenged the action of the CIT(A) in reversing the tax imposed under s. 206C(1) r.w.s. 206C(6), 206C(6A) of the Act amounting to Rs. 27,60,838/- and interest thereon amounting to Rs. 23,19,104/- imposed by the AO under s. 206C(7) of the Act. 3. When the matter was called for hearing, the learned DR for the Revenue relied upon the order of the AO and submitted that the assessee has failed to collect TDS at the time of sale of 'scrap' of arising on dismantling of ships on certain items aggregating to Rs. 16,98,13,542/- with contravention of Section 206C of the Act. The le....

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....s finished product without alterations. In the context, the learned AR referred to the Explanation (b) to Section 206C of the Act which defines expression 'scrap' to mean 'waste and scrap' which is not usable as such i.e. in the same form as generated. The learned AR contended that the items falling in 'Part-B' of the tabulated statement as pointed out above are usable in the same form and therefore do not fall within the definition of expression 'scrap' and thus not susceptible to the provisions of Section 206C of the Act. The learned AR relied upon the decision of the co-ordinate bench of Tribunal in ITO v. Priya Blue Industries (P.) Ltd. [IT Appeal No. 2207 (Ahd) 2011, order dated 14-5-2015] in this regard....

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....under appeal and interest of Rs. 23,19,104/- u/s.206C(7) of the I.T. Act. 1961 for the said default in collection & payment of TCS. The appellant has also argued that as the buyers of such goods have furnished declaration that the goods shall be used for the purpose of manufacturing/processing/producing articles or things and not for trading and they have given a declaration u/s.206C(IA) of the I.T. Act, 1961 & therefore, the provisions of Sec.206C are not applicable in respect of items sold to them. 5.5.1 I have gone through the contents of the paper book filed by the appellant and also the remand report and the rejoinder thereon obtained during the course of the appellate proceedings. The appellant has submitted that the buyers of such ....

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.... April 17. 2015, Hon'ble ITAT Bangalore Bench 'C' decided on the similar issue as under: "Section 206C(1A) mandates that any person responsible for collecting tax. under section 206C(1) need not do so if he obtains a declaration from the buyer that he is purchasing the goods for use in manufacturing, processing or producing articles or things, he does not say that such declaration has to be obtained at the very same moment when a sale is affected............" Recently, Hon'ble High Court of Gujarat in tax Appeal No/519'of 2016 Tax Appeal No. 526 of 2016 Commissioner of Income Tax (TDS)....Appellant(s) v. Siyaram Metal Udyog (P.) Ltd.....Opponent(s) in its order dated 27/06/2016 concluded as under: "..... ..............

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.... from the ships and sold as it is without undergoing any manufacturing process thereon and the same therefore cannot partake the character of scrap within the meaning of section 206C of the Act. The appellant therefore cannot be burdened with the liability of TCS in connection with sale of such products. It is therefore held that insofar as the sale of Rs. 16,98,13,542/- towards various non-excisable products was concerned, the appellant could not have been treated as assessee in default. However, the AO has written in his remand report that "out of amount of Rs. 16,98,13,542/- which includes non-excisable, old and used plates etc, the items on which no relief is available as per judgment discussed above are clearly liable for TCS." But the....

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....65320 Misc. items 17000 0 0 0 2125 0 19125 Machinery & machinery pans 3885000 0 0 0 98400 0 3983400 Fuel & Oil 6543961 0 0 0 822047 0 7366008 Fire wood & wooden items 1933748 0 0 0 11295 0 1945043 Articles of iron steel anchor 332866 53258 1065 533 11632 4526 403880 Total B 141750181 20650185 413000 206509 6840837 122064 169982776 Grand Total.... A+B 259709307 39170760 783413 391715 11938568 256181 312249944 7. It is the case on behalf of the assessee that non-residuary items are outside the purview of Explanation (b) to Section 206C of the Act where the 'waste and scrap' arising from ship breaking is usable as such without modification. Sale of such items capable of being use....