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2022 (1) TMI 173 - AT - Income TaxFailure to collect TCS u/s 206C(1) - trading of scrap - sale of scrap to manufacturer - Period of limitation - Assessee failed to submit the Form No.27BA and failed to furnish the declarations in Form 27C as required under the explanation (1A) and (1B) to section 206C(1) in the office of the Competent Authority - assessee submits that assessment order passed by u/s 206C(6)/(6A) r.w.s 206C(7) as barred by limitation and therefore deserves to be quashed - HELD THAT:- Section 206C prescribes two window wherein, assessee seller does not require to collect TCS. First is obtain declaration (in Form 27C) from the counter party-purchaser, that goods so purchased are to be utilized for the purposes of manufacturing, processing or producing articles or things or for the purposes of generation of power and not for trading purposes and in those cases assessee seller is not required to collect TCS on such transactions. The same is envisaged in Section 206C(1A) of the Act. The second window is to obtain certificate, to the effect that buyer has furnished his return of income u/s 139 of the Act and has taken into account such amount for computing income in such return of income; and has paid the tax due on the income declared by him in such return of income. Such certificate should be obtained from a Chartered Accountant as per proviso to section 206C(6A) of the Act, in Form 27BA, as prescribed by CBDT. Respectfully following the Judgment of Bharat Hotels Ltd, [2015 (12) TMI 1469 - KARNATAKA HIGH COURT] we note that in assessee`s case under consideration, order passed by the assessing officer under section 206C(6)/(6A) r.w.s 206C(7) for AY.2012-13 and A.Y. 2013-14 are barred by limitation and therefore we quash both the orders of the assessing officer and hence we allow the appeal of the assessee. Interpreting the term Scrap as defined in clause (b) to Explanation to section 206C - For AY 2014-15 to AY 2016-17 as noted that assessee under consideration is a trader in scrap. His products are not a result of manufacturing process carried out by him. Thus, assessee being trader, not covered in definition of "scrap", since scrap is not generated from manufacturing or mechanical working of material, therefore the assessee is not covered in definition of ‘scrap’. Hence, in our considered opinion, the assessee cannot be treated as an assessee in default, therefore we allow appeals of the assessee.
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