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2018 (1) TMI 1554 - AT - Income TaxTCS @ 1% on sale of alleged scrap - assessee in default within the meaning of Section 206C - A.O. found that the assessee has not submitted proof of filing of Form 27C nor it has obtained the same from the buyers of scrap - HELD THAT:- There is no dispute that the assessee is engaged in the business of trading of scraps obtained from Ship Breaking Yard. In our considered opinion, provisions of Section 206C do not apply in case of scrap generated in the course of ship breaking activity. Items generated out of ship breaking activity might be commercially known as “scrap” since such items are not waste and scrap. Since such items are re-useable. Once such items sold cannot be termed as “scrap” would make the provisions of Section 206C of the Act in applicable. The items sold by the assessee do not fit into the category of scrap as explained in the case of Priya Blue Industries (P.) Ltd. [2015 (11) TMI 1216 - GUJARAT HIGH COURT]. Therefore, in our considered opinion, the assessee cannot be treated as an assessee in default and on the impugned sales cannot be treated as sale of scrap thereby making the assessee out of the purview of Section 206C of the Act. Insofar as the submissions of Form 27C is concerned, the Hon’ble High Court of Gujarat in the case of Siyaram Metal Udyog (P.) Ltd. [2016 (7) TMI 68 - GUJARAT HIGH COURT] has held that “No time limit is provided in section 206C(1A) to make a declaration in Form 27C collected from buyers; mere minor delay in furnishing Form 27C would not make assessee liable for non-collection of TCS”. We do not find any merit in the impugned demand raised by the A.O. - Decided in favour of assessee.
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