TaxTMI 
TaxTMI 
2026 (1) TMI 460
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....peals are belonging to same assessee, therefore, all these appeals are clubbed and heard together and a consolidated order being passed. Firstly, we take up the appeal in ITA No. 575/VIZ/2025 (A.Y. 2017-18) as lead appeal and brief facts are culled out therefrom. ITA No. 575/VIZ/2025 (A.Y. 2017-18) 3. This appeal is filed by the assessee against the order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal centre, Delhi [hereinafter in short "Ld.CIT(A)"] vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1078863671(1) dated 24.07.2025 for the A.Y.2017-18 arising out of order passed under section 206C of Income Tax Act, 1961 (in short 'Act') dated 31.03.2021. 4. Brief facts of the case are that, a TDS Survey Operation under section 133A(2A) of the Act was conducted in the office premises of the assessee on 03.02.2020 to verify the assessee's compliance to the TDS/TCS provisions as per Chapter XVIIB of the Act. Consequent to the survey, the assessee furnished the information called for. On verification of the information furnished by the assessee, the Ld. Assessing Officer [hereinafter in short "Ld. AO"] noticed that assessee has made cotton waste sales withi....
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....206C are not applicable to the appellant. 4. Any other grounds may be urged at the time of hearing." 8. Ground Nos. 1 & 4 are general in nature and needs no adjudication. 9. Ground Nos. 2 & 3 challenges the demand raised by the Ld. AO considering the cotton waste sold by the assessee as scrap under provisions of section 206C of the Act. On this issue, Ld. Authorised Representative [hereinafter "Ld.AR"] submitted that the cotton waste when used as the raw material in the open-ended spinning mills, it cannot be considered as the scrap under the under provisions of section 206C of the Act. He referred to the explanation provided to section 206C of the Act wherein the "Scrap" has been defined. He submitted that scrap means waste and scrap from the manufacture or mechanical working of the materials which is "DEFINITELY NOT USABLE AS SUCH" because of breakage, cutting up, wear and other reasons. He further submitted that the cotton waste has been sold to various open-ended spinning mills who use the same as the raw material in their spinning mills. He referred to the written submissions made before the Ld. CIT(A) stating the above facts. He also submitted that he has filed....
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....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, whichever is earlier, collect from the buyer of any goods of the nature specified in column (2) of the Table below, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income-tax: TABLE Sl. No. Nature of goods Percentage (1) (2) (3) (i) Alcoholic Liquor for human consumption One per cent One per cent (ii) Tendu leaves Five per cent (iii) Timber obtained under a forest lease Two and one-half per cent (iv) Timber obtained by any mode other than under a forest lease Two and one-half per cent (vi) Scrap One per cent] ^3[(vii) Minerals, being coal or lignite or iron ore One per cent:] ..... Explanation - For the purposes of this section,- ........ (b) scrap" means waste and scrap from the manufacture or mechanical working of materials which is definitely not usabl....
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....of law to be considered in this appeal. The tax case appeal is, therefore, dismissed. No costs. Consequently, M. P. No. 1 of 2010 is also dismissed." 15. Further, the Hon'ble Gujarat High Court in the case of Pr. CIT (TDS) v. Safari Fine Clothing (P.) Ltd., (supra) held in Para No. 9 as follows: - "9. On a plain reading of the above definition, it is evident that the scrap is something that is generated from manufacture or mechanical working of materials. In the present case, both, the Commissioner (Appeals) as well as the Tribunal, have recorded concurrent findings of fact to the effect that the manufacturing activity of the assessee was to cut garments into smaller pieces to create rags, wipers or chindi, as per the specifications and as per the orders placed by various buyers. It has also come on record that the products manufactured by the assessee are classified under the Excise Laws under headings 63.09 and 63.10. Categorical findings of fact had been recorded by the Commissioner (Appeals) to the effect that the assessee was actually processing the imported garments to cut them into smaller pieces as per the requirements of various end users and the rags were bein....
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....ns. On a plain reading of the said expression, it is evident that any material which is usable as such would not fall within the ambit of the expression "scrap" as envisaged under clause (b) of the Explanation to section 206C of the Act." 17. In the instant case, we find that the Ld. CIT(A) prima facie agreed with the view that the cotton waste sold by the assessee is not liable for TCS but however he concludes that assessee has not furnished Form No. 27C which is mandatory requirement. The case relied on the by the Ld.AR in the case of CIT v. Adisankara Spinning Mills (P.) Ltd. (supra), the Hon'ble Gujarat High Court has held that filing of the statutory Form No. 27C being a technical breach was liable to be condoned as held in the case of CIT v. A.N. Arunachalam [[1994] 208 ITR 481 (Madras)] by the Hon'ble Madras High Court. 18. In the instant case, the assessee has submitted the declarations from the Traders that the use of products which is considered as a raw material for the open-ended spinning mills. Respectfully following the above judicial precedents as discussed above, we are of the opinion that the provisions of section 206C is not attracted in the case of the asse....