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Karnataka Forest Development Corporation Ltd. Versus Income Tax Officer, Tds Ward, Davangere

2015 (7) TMI 908 - ITAT BANGALORE

Default under section 206C(6A) - short collection of tax at source (TCS) - goods for use in manufacturing, processing or producing articles or things. - Held that:- Section 206C(1A) mandates that any person responsible for collecting tax under section 206C(1) need not do so if he obtains a declaration from the buyer that he is purchasing the goods for use in manufacturing, processing or producing articles or things. It does not say that such declaration has to be obtained at the very same moment .....

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affected, and in filing it before the CCIT or CIT, as the case may be, a similar breach was considered to be only technical and one that could be condoned by Hon'ble Madras High Court in the case of Adisankar Spinning Mills (P) Ltd., (2010 (12) TMI 1084 - MADRAS HIGH COURT ). In the said case, assessee had filed Form 27C subsequent to the proceedings, through a rectification petition under section 154, but still considered to be sufficient compliance, which view of the Tribunal was confirmed by .....

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fore of the opinion assessee could not have been deemed as one in default under section 206C (6D) of the Act or liable for interest under section 206(7). - Decided in favour of assessee. - Stay Petn. Nos. 27 to 29/Bang/2015, ITA Nos.1144 to 1146/Bang/2014, ITA Nos. 114 to 1146/Bang/2014 - Dated:- 17-4-2015 - Rajpal Yadav, JM And Abraham P. George, AM,JJ. For the Appellant : Shri S Ananthan, CA For the Respondent : Shri T S N Murthy, CIT, DR ORDER Per Abraham P. George, AM. In these appeals filed .....

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as, as per its website the following objects: "1. To develop land for raising forest plantations and in particular Eucalyptus, Bamboo, Tropical Pines, Rubber, Cashewnut, Cocoa, Tea, Coffee and such other suitable species in the State of Karnataka, for the purpose of development of industries based on their produce. 2. To plant, grow, cultivate, produce and raise plantations of all kinds of varieties of forest plants, trees and crops and natural products of every kind and other agricultural .....

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anufacturing forest products. 5. To promote the development of Forest Industries, to operate suitable schemes and for that purpose to prepare and get or cause to be prepared reports, blue prints, statistics, feasibility studies and project reports and other information. 6. To promote companies, firms, establishments, concerns or undertakings for the purpose of development of industries based on forest produce and to assist and finance any individual firms or company with capital, loan, credit re .....

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of the assessee was that: i. The buyers were manufacturers and not traders and the wood pulp was used for manufacture. ii. Wood pulp sold by it was not a forest produce. iii. Wood used for pulping was not spontaneous growth, but cultivated by the assessee on leased forest land. Along with the above reply assessee also filed a declaration from the buyer in Form 27C in which they affirmed that the wood pulp was being used for their manufacturing activity only. 4. However, the AO was not impressed .....

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ed, since it was a Government company. After verifying the sales made to the other two parties, he concluded that assessee was one in default within the meaning of section 206C(6A) for short collection of tax of ₹ 22,03,232/- for assessment year 2009-10, ₹ 14,48,680/- for assessment year 2010-11 and ₹ 23,49,112/- for assessment year 2011-12 and for interest of ₹ 11,11,774/- for assessment year 2009-10, ₹ 5,56,074/- for assessment year 2010-11 and ₹ 7,14,618/- .....

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e orders of the AO. 6. Now before us, ld AR strongly assailing the order of the lower authorities, through his submissions endeavored to drive home the following points: i. Declaration in Form 27C as prescribed in Rule 37 of the Income-tax Rules 1962 was filed before the AO during the course of the proceedings. ii. Delay in filing copy of the declaration can invite penalty under section 272A(2)(j) of the Act but cannot render the assessee, one in default. iii. Form 27C was filed for both the par .....

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each, liable to be condoned. In support of his contention that section 206C applied only to a forest produce he relied on a judgment of Hon'ble Andhra Pradesh High Court in the case of Andhra Pradesh Forest Development Corporation Ltd. vs. ACIT (2005) 272 ITR 245. 7. Per contra, learned Departmental Representative submitted that Form No.27C was filed by the assessee late, only when proceedings were initiated for the default. This, as per the ld.DR, was done only to circumvent the consequence .....

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t disputed that assessee had filed the declaration from the buyer, as mandated in section 206C(1A) only when show cause notices were issued by the AO, pointing out failure to collect tax at source. However, it remains a fact that assessee had produced Form No.27C obtained from both the parties. Copies of these Forms have been placed on record at paper book pages 1 to 66. Both Part I and Part II of the Forms have been filled up. At this juncture, it is necessary to have a reading of section 206C( .....

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n column (2) of the Table below, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income-tax: TABLE Sl.No. Nature of goods Percentage i) Alcoholic Liquor for human consumption One per cent ii) Tendu leaves Five per cent iii) Timber obtained under a forest lease Two and one-half per cent iv) Timber obtained by any mode other than under a forest lease Two and one-half per cent v) Any other forest produce not being timber or tend .....

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s earlier, collect from the buyer of any goods of the nature specified in column (2) of the Table as it stood immediately before the 1st day of June, 2003, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income-tax in accordance with the provisions of this section as they stood immediately before the 1st day of June, 2003. (1A) Notwithstanding anything contained in sub-section (1), no collection of tax shall be made in the ca .....

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ause 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." "Declaration by a buyer for no collection of tax at source under section 206C(1A). 37C. (1) A declaration under sub-section (1A) of section 206C to the effect that any of the goods referred to in the Table in sub-section (1) of that section are to be ut .....

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on or before the seventh day of the month next following the month in which the declaration is furnished to him. Explanation.-For the purposes of sub-rule (3), the Chief Commissioner or Commissioner means the Chief Commissioner or Commissioner to whom the Assessing Officer, having jurisdiction to assess the person referred to in sub-rule (2), is subordinate." 9. Section 206C(1A) mandates that any person responsible for collecting tax under section 206C(1) need not do so if he obtains a dec .....

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