TMI Blog2011 (2) TMI 1110X X X X Extracts X X X X X X X X Extracts X X X X ..... ne 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. - ITA No.1213 and 1214/Ahd/2010 - - - Dated:- 15-2-2011 - S/SHRI BHAVNESH SAINI, D. C. AGRAWAL, JJ. ORDER Both the appeals by the assessee are directed against the common order of the learned CIT (A)-I, Surat dated 08-02-2010 for assessment years 2009-10 and 2010-11 challenging the order of the learned CIT (A) in confirming the action of the AO holding that the assessee has failed to collect tax at sources under section 206C (6) of the IT Act on sale of scrap and consequently of charging interest under section 206C (7) of the IT Act. 2. The issue in both the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 206C and raised the tax being 1% of the sales and levied interest under section 206C (7) of the IT Act. The TCS demand raised for 2009-10 was Rs. 44,200/- and interest of Rs. 5,852/-. For assessment year 2010-11 the TCS demand raised is Rs. 33,626/- and interest of Rs. 1,241/-. 4. The orders of the AO were challenged before the learned CIT (A) and the assessee has repeated the submissions made before the AO and stated that word scrap has been defined in explanation (b) to section 206C of the IT Act to mean waste and scrap from the manufacturing or mechanical working of materials which is definitely not usable as such because of breakages, cutting up, wear and other reasons . From this definition, it is clear that scrap to be covered under section 206 C of the IT Act should arise from the manufacture or mechanical working of material and since the assessee s scrap did not arise from manufacture or mechanical work of material, the provisions of section 206C of the IT Act are not attracted. The assessee, therefore, stated that the demand should be deleted. 5. The learned CIT (A) considering the submission of the assessee and the observation of the AO dismissed both the appeals o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of scrap includes both waste and scrap and as such the waste or the scrap which is sold is also subjected to tax and for the waste there is no need to have any connection with manufacture or mechanical working of material. He has submitted that the assessee has admittedly sold the scrap; therefore, provisions of section 206 C of the IT Act are clearly applicable in the case of the assessee. The learned DR submitted that the word waste and scrap are different items. He has, therefore, submitted that the appeals of the assessee have no merit and the same be dismissed. 9. We have considered the rival submissions and perused the findings of the authorities below. The applicability of the provisions of section 206 C of the IT Act for charging of tax on scrap is not in dispute. It is also not in dispute that the assessee has sold scarp of various items as noted above in this order. The issue under consideration depends upon the interpretation of the meaning of scrap as is provided in explanation (b) to section 206 C of the IT Act. It is, therefore, necessary to refer to some of the relevant provisions connected with the issue provided under section 206C of the IT Act. The same reads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or producing articles or things and not for trading purposes. (1B) The person responsible for collecting tax under this section shall deliver or cause to be delivered to the Chief Commissioner or Commissioner one copy of the declaration referred to in sub-section (1A) on or before the seventh day of the month next following the month in which the declaration is furnished to him.] [(1C) Every person, who grants a lease or a licence or enters into a contract or otherwise transfers any right or interest either in whole or in part in any parking lot or toll plaza or mine or quarry, to another person, other than a public sector company (hereafter in this section referred to as "licensee or lessee") for the use of such parking lot or toll plaza or mine or quarry for the purpose of business shall, at the time of debiting of the amount payable by the licensee or lessee to the account of the licensee or lessee or at the time of receipt of such amount from the licensee or lessee in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the licensee or lessee of any such licence, contract or lease of the nature specified in column (2) of the Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation. For the purposes of this section, [(b) "scrap" means waste and scrap from the manufacture or mechanical working of materials which is definitely not usable as such because of breakage, cutting up, wear and other reasons;" 10. The Hon ble Delhi High Court in the case of CIT v. Deep Chand and others (2002) 257 ITR 756 (Del) relied upon the decision of the Hon ble Supreme Court in the case of Gurudevdatta VKSSS Maryadit v. State of Maharashtra AIR (2001) SC, 1980 in which it was held as under: It is a cardinal principle of interpretation of statute that the words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning, unless such construction leads to some absurdity or unless there is something in the context or in the object of the statute to suggest to the contrary. The golden rule is that the words of a statute must prima facie be given their ordinary meaning. It is yet another rule of construction that when the words of the statute are clear, plain and unambiguous, then the courts are bound to give effect to that meaning, irrespective of the consequences. It is said that the words themselves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead differently as is argued by the learned DR. The list of scrap sold by the assessee is reproduced above which are not connected with manufacture or mechanical working of material. The findings of the learned 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 learned 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. 13. Considering the facts noted above, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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