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2011 (2) TMI 1110 - AT - Income TaxFailure to deduct TDS on sale of scrap u/s 206 C (6) - interest charged u/s 206C (7) - Assessee stated since the assessee’s scrap did not arise from manufacture or mechanical work of material, the provisions of section 206C are not attracted - Held that:- The waste and scrap being one item should arise from the manufacture or mechanical working of material. It is, therefore, necessary to read the words waste and scrap together which are generated out of manufacturing process of the assessee. The words waste and scrap thus cannot be read differently as is argued by the DR. The list of scrap sold by the assessee which are not connected with manufacture or mechanical working of material. The findings of the CIT(A) are based on presumption only that since the assessee is engaged in manufacture of fluorine and other refrigerated gases, therefore, entire scrap is generated out of its manufacturing activities. The findings of the CIT(A) are not based on any material or evidence. The assessee is admittedly engaged in manufacturing of fluorine and other refrigerated gases and list of scrap items noted above would indicate that same cannot be used for manufacturing or mechanical working of material of fluorine and other refrigeration gases. By the nature of the scrap items noted above, the same cannot be used while manufacturing gases or doing any mechanical working of the material for the gases. The items of the scrap in the case of the assessee would not form part of the definition of the scrap as is provided in Explanation (b) to section 206C of the IT Act. Thus, the explanation is wrongly applied in the case of the assessee. In favour of assessee.
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