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2020 (4) TMI 438 - AT - Income TaxTCS u/s 206C(1) - business activity of trading in ferrous and non-ferrous metals carried on by the appellant firm, as an activity of sale of scrap - treating the appellant as an assessee in default for not collecting TCS @ 1 % on the entire sale proceeds made by the appellant firm - HELD THAT:- We find that it is an undisputed fact that the assessee is not a manufacturer and is only a dealer in scrap. During the years under consideration, as noted in the assessment orders, the assessee had sold scrap, which included unburned transformer coils from various distribution companies of UPPCL. We find that whether a trader in scrap is liable to be fastened with liability to collect TCS under section 206C came up for consideration in the case of ‘Navine Fluorine International Ltd. vs. ACIT(TDS) [2011 (2) TMI 1110 - ITAT, AHMEDABAD] wherein, the ITAT held that to fall under the definition of scrap as given in the Explanation to section 206C of the Act, the term ‘waste’ and ‘scrap’ are one and which should arise from manufacture and if the scrap is not coming out of manufacture, then the items do not fall under the definition of scrap and thus not liable to TCS. We further find that the Ahmedabad Bench of ITAT in the case of ‘ITO(TDS) vs. Priya Blue Industries Pvt. Ltd.[2015 (11) TMI 1263 - ITAT AHMEDABAD] again relied on the order of the Ahmedbad Bench of the ITAT in the case of ‘Navine Fluorine International Ltd. vs. ACIT(TDS)’ [supra] and held that the words ‘waste’ and ‘scrap’ should have nexus with manufacturing or mechanical working of materials - Decided in favour of assessee.
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