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2016 (10) TMI 433 - AT - Income TaxTCS u/s 206C(7) - Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc. - Held that:- As certain items generated out of ship breaking activity might be known commercially as “scrap” but they are not waste and scrap. These items are reusable as such, and therefore, would not fall within the definition of “scrap” as envisaged in the Explanation to section 206C(1). The assessee has also contended that it was engaged in the sale of MS pipe, iron which were obtained from ship breaking industries. The assessee himself has not generated any scrap in manufacturing activity, as contemplated in the Explanation. He was a trader. Therefore, the assessee has not sold scrap as such. He has sold the products resulted from ship breaking activity, which are re-usable. Thus, the assessee was not supposed to collect tax under section 206C of the Act. The ld.AO has erred in raising the demand. Allow all appeals and delete additions.
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