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2019 (9) TMI 1125 - AT - Income TaxTCS u/s 206C - Failure to to collect TCS at the time of sale of 'scrap' of arising on dismantling of ships on certain items - Tax imposed u/s 206C(1) r.w.s. 206C(6), 206C(6A) and interest thereon u/s 206C(7) - HELD THAT:- There is no violation of the provisions of section 206C of the Act in view of either the sale of specified products being that of non-excisable, non-scrap products (to the extent of ₹ 16,98,13,542/-), or the same being against receipt of declarations in prescribed form number 27C (to the extent of ₹ 9,39,36,107/-). As already been held, while dealing with the first ground of appeal, that the non-excisable products are obtained from the ships and sold as it is without undergoing any manufacturing process thereon and the same therefore cannot partake the character of scrap within the meaning of section 206C. The appellant therefore cannot be burdened with the liability of TCS in connection with sale of such products. Insofar as the sale towards various non-excisable products was concerned, the appellant could not have been treated as assessee in default. However, the AO has written in his remand report that “out of amount of ₹ 16,98,13,542/- which includes non-excisable, old and used plates etc, the items on which no relief is available as per judgment discussed above are clearly liable for TCS.” But the AO has not given any working whether this amount includes such items on which relief is not available. At the time of assessment also the AO has not pointed out any discrepancy in the chart of sale provided by the assessee which shows a sale of ₹ 16,98,13,542/- in part 'B' which contains used plates, machinery and machinery part, fuel and oil, fire wood and wooden items and articles of iron steel anchor. These are the items obtained by the assessee in the course of ship breaking activity and these are 'usable as such' on which as per court decision in the case of Priya Blue [2015 (11) TMI 1216 - GUJARAT HIGH COURT] no TCS is to be collected, and therefore, do not fall within the definition of 'scrap'. Hence, the items shown in Part 'B' of the chart given by the assessee to the AO at the time of assessment amounting to ₹ 16,98,13,542/- are not under the purview of the provision of TCS. The AO is directed to treat the appellant not liable to collect TCS on the sales. Sale of certain items arising from ship breaking activity grouped by assessee - It is the case on behalf of the assessee that non-residuary items are outside the purview of Explanation (b) to Section 206C of the Act where the 'waste and scrap' arising from ship breaking is usable as such without modification. Sale of such items capable of being used as such is outside the ambit of Section 206C of the Act. We find merit in the plea raised on behalf of the assessee in the light of decision of Hon'ble Gujarat High Court in the case of Priya Blue Industries (P.) Ltd. (supra). Thus, on first principles, the items sold which are capable of being used as such are discharged from the obligations fastened under s. 206C of the Act. CIT(A) in our view has looked into the controversy objectively after taking cognizance of remand report and replies of the assessee and in the light of evidence placed before it. - Decided against revenue
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