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I.T.O (TDS) Ward 58 (4) Versus Sri Nirmal Kumar Kejriwal and Vica-Versa

2016 (5) TMI 640 - ITAT KOLKATA

Tax Collection at Source (TCS) - Violation of provisions of section 206C - assessee in default - levy and collection of tax at source in respect of profits and gains of trading in Sawn timber - Held that:- The sawn timber were sold by the assessee to the persons who were engaged in manufacturing and processing furniture and such other products. Hence the assessee’s case falls under the exception provided in provisions of section 206C(1A) of the Act. Sale of sawn timber does not fall under the am .....

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Learned CIT(A)-I, Kolkata in Appeal Nos. 85-89 / CIT(A)-I/58(4)/11-12 dated 19.11.2012 against the consolidated order of the Learned AO framed for the Asst Years 2005-06 to 2009-10 u/s 206C(6)/206C(7) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). Since the issue involved in all the appeals of the revenue are identical in nature, they are taken up together and disposed off by this consolidated order for the sake of convenience. 2. The only issue to be decided in these appeals .....

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e buyers on sale of sawn timber in accordance with the provisions of section 206C of the Act. The assessee tried to explain that no tax was collectible on sale of sawn timber as section 206C of the Act stipulates tax to be collected at source (TCS) and remitted only in respect of timber and not sawn timber. It was further explained that articles like sawn timber resulted different articles than timber as contained in table in section 206C(1) of the Act by operation of sawing machines and sawn ti .....

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The Learned AO not being satisfied with the replies of the assessee, treated the assessee as assessee in default for failure to collect tax at source in terms of section 206C(1) of the Act. On first appeal, the Learned CIT(A) held that sawn timber is different from timber as there was radical change from timber to sized timber. Accordingly, he held that the provisions of section 206C(1) is not applicable to the assessee. Aggrieved, the revenue is in appeal before us by raising the similar groun .....

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the forest lease or other modes. Each and every timber which is obtained from tree is cut through by hand saw or mechanical saw machine and only by cutting through a saw machine the timber is detached from its plant/tree. 2. The sawn timber is the same timber with the same chemical, physical, core properties, same constituents, same internal bonding etc. and it is not a new product. 3. The CIT (A) was not justified in stating that the word timber cannot be extended to the meaning of the sawn tim .....

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Development Corpn. Ltd, wherein, in para 14 of the Tender document under the caption Restriction of Sale etc . b) Pictorial representation of business process of timber into sawn timber. He further placed reliance on the decision of the Hon ble Calcutta High Court in the case of Shaw Bros. and Co vs The State of West Bengal reported in 1963 14 STC 878 (Cal). He further argued that the sawn timber were sold to the persons who utilized goods for the purpose of manufacturing, processing and produc .....

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in such return of income, then the seller of the sawn timber (assessee herein) shall not be treated as assessee in default. For this he placed reliance on the decision of the Hon ble Supreme Court in the case of Hindustan Coca Cola Beverage (P) Ltd vs CIT reported in 293 ITR 226 (SC). 5. The Learned DR vehemently relied on the order of the Learned AO and argued that the provisions of section 206C of the Act use the word timber, which includes all types of timber. He further stated that the deci .....

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collected from the buyer shall be paid by the seller within the prescribed time to the account of the Central Government. Otherwise, the seller shall be treated as assessee in default. We find that the Learned AO had invoked the item no. (iv) of Table in Section 206C(1) of the Act i.e timber obtained by any mode other than under a forest lease . The Learned CIT(A) had given a categorical finding that the assessee had traded only in Sawn timber and not timber. We have to decide whether the timbe .....

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lying in the Corporation depot. No sawing or conversion of timber is to be permitted in the depot premises under any circumstances what so ever. This particular restrictive covenant in the tender document for timber proves that the term timber is different from sawn timber. 6.1. We find that when timbers are sawed out of logs or big size of timber, what is produced is a different thing for different uses. A new kind of commodity is manufactured because sawn timber made out of timber is not timb .....

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find that the term manufacture is not defined in the Act. The Hon ble Supreme Court in the case of Aspinwall and Co. Ltd vs CIT reported in 251 ITR 323 (SC) had held that :- … The word manufacture has not been defined in the Income-Tax Act. In the absence of a definition, the word manufacture has to be given a meaning as is understood in common parlance. It is to be understood as meaning the production of articles for use from raw or prepared materials by giving such materials new forms, .....

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planks , sleepers , etc., amount to manufacture. Hence it could be safely concluded that the timber is different from sawn timber and hence the provisions of section 206C of the Act would not be applicable to the assessee. 6.4. We find that the Learned CIT(A) had given a categorical finding that the sawn timber were sold by the assessee to the persons who were engaged in manufacturing and processing furniture and such other products. Hence the assessee s case falls under the exception provided .....

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