TMI Blog2015 (11) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... l within the definition of scrap. However, since the assessee had not collected tax at source on items other than items obtained out of the manufacturing activity in the course of ship breaking, the Tribunal has remitted the matter to the Assessing Officer for the purpose granting relief to the assessee under the provisions of section 206C (1) of the Act with regard to only sale of scrap arising out of manufacturing activity in the course of ship breaking after providing due opportunity of hearing to the assessee. Thus, the Tribunal after recording a finding of fact to the effect that the products obtained by the assessee in the course of ship breaking activity are usable as such, and, therefore, do not fall within the definition of scrap h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inct words? (C) Whether the Appellate Tribunal has substantially erred in deleting the order passed under section 201(1) of the Income Tax Act of ₹ 40,16,418/- and interest charged under section 201(1A) of the Act of ₹ 23,29,522? 2. The Assessing Officer upon verification of the records noticed that during the financial year 2005-06, the assessee had made sales of scrap worth ₹ 35,79,69,613/-; however, no documents/papers leading to collection of tax at source on sale of scrap and payment thereof to the credit of the Central Government Account were produced nor was certification in Form No.27C produced. According to the Assessing Officer, the assessee was under an obligation to collect from the buyer of the scr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s:- As per assessee, assessee has collected and paid TCS on following type of items of sales during the year. 1. ARTICLES OF IRON STEEL WIRE ROPES 2. WASTE SCRAP OF CASTIRON 3. WASTE SCRAP OF COPPER 4. WASTE SCRAP OF IRON STEEL 5. WASTE SCRAP OF STAINLESS STEEL 6. WASTE SCRAP, OF NICKET 7. WASTE SCRAP OF GM, GUM, COP, GER.ALU.PRO Assessee has not collected TCS on following type of items sold during the year: 1. Old and used plates 2. Non-excisable (exempted) like furniture, wood, etc. 3. Trading of scrap (melting) 4. High seas sale We find that ITAT B Bench, Ahmedabad in ITA Nos.1213 and 1214/Ahd/2010 dated 15.02.2011 in case of Navine F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tt, learned senior standing counsel for the appellant assailed the impugned order by submitting that the interpretation put by the Tribunal as regards the expression scrap is erroneous, inasmuch as, section 206 clearly says 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. It was submitted that the Tribunal has held that waste and scrap are one item and has restored the issue to the Assessing Officer with a direction to grant relief to the assessee under the provisions of section 206C (1) of the Act with regard to only sale of scrap arising out of manufacturing activity in the course of ship breaking after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Madras High Court in the case of Commissioner of Income tax v. Adisankara Spinning Mills (P.) Ltd. , (2014) 362 ITR 233 (Mad ), wherein the court had held that the cotton waste disposed of by the respondent assessee was reused raw material for manufacture of lower count of cotton yarn and, therefore, did not fall within the definition of scrap as defined in Explanation (b) to section 206C of the Act. The court held that the conclusion of the Tribunal having been reached as a finding of fact, did not give rise to a question of law. It was, accordingly, urged that the appeal being devoid of merits, deserves to be dismissed. 5. From the facts as narrated hereinabove, it is apparent that the respondent assessee had collected and pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lumn (3) of the said Table, of such amount as income-tax. The nature of goods specified at serial No.(vi) is scrap, and the percentage provided is 1%. The expression of scrap is defined under clause (b) to the Explanation to section 206 of the Act, to mean waste and scrap from manufacture or mechanical working of materials which is definitely not usable as such because of breakage, cutting up, wear and other reasons. On a plain reading of the said expression, it is evident that any material which is usable as such would not fall within the ambit of the expression scrap as envisaged under clause (b) of the Explanation to section 206C of the Act. 8. The Tribunal, in the impugned order, has recorded that the items/products in question obt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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