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2016 (6) TMI 646 - KARNATAKA HIGH COURT

2016 (6) TMI 646 - KARNATAKA HIGH COURT - TMI - Tax Collection at Source (TCS) - Liability of the assessee to supply the declaration u/s 206C - whether Tribunal erroneously did not consider the aspect that as per Section 206-C(1) of the Act such declaration has to be furnished when the payment is made by issuance of the cheque or by debiting the entries in the books of accounts whichever is earlier? - Held that:- Tribunal has interpreted the provisions of Section 206-C(1a) observing that, the as .....

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d be condoned as per the earlier decision of the Tribunal which has been interfered with by the Madras High Court in the case of CIT vs. Adishankar Spinning Mills(P) Ltd., (2010 (12) TMI 1084 - MADRAS HIGH COURT ).

It appears that thereafter, as in the present case, declaration of the buyer was furnished in response to the show-cause notice and as it was not the case of the revenue that the declaration was false, the Tribunal set aside the order of the lower authorities.. We are unab .....

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se of the appellant- revenue that any false declaration was filed. No substantial question of law - Decided against revenue - ITA NOS. 587/2015 & 212/2016, ITA NOS. 588/2015 & 232/2016 C/W ITA NOS. 589/2015 & 233/2016 - Dated:- 22-4-2016 - MR. JAYANT PATEL AND MRS. B.V.NAGARATHNA JJ. For the Appellant: Sri. K.V. Aravind, Advocate JAYANT PATEL J ., JUDGMENT As all the appeals arise from a common order passed by the Tribunal, they are being considered simultaneously. 2. The appellant-revenue has p .....

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ting only the delay in filing the declaration before CIT, which is not at all the issue in the order passed by ITO (TDS), thus giving decision which is beyond jurisdiction and the issue what Tribunal has not considered whether the lapse which the seller has committed by not obliging to collect tax in the absence of declaration by the buyer is condonable or not? We have heard Mr. Aravind, learned counsel appearing for appellant-revenue. 4. The relevant discussion by the Tribunal on the aforesaid .....

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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(1A), 206(1B) and rule 37C which prescribed Form 27C. 206C. Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc.- (1)Every person, being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from the said buyer in .....

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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 tendu leaves Two and one - half per cent vi) Scrap One per cent: Provided that every person, being a seller shall at the time, during the period beginning on the 1st day of June, 2003 and ending on the day immediately preceding the date on which the Taxation Laws (Amendment) Act, 2003 comes into force, of debiting of the amount payable by the buyer to the a .....

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ediately before the 1st day of June, 2003. (1A) Notwithstanding anything contained in sub-section (1), no collection of tax shall be made in the case of a buyer, who is resident in India, if such buyer furnishes to the person responsible for collecting tax, a declaration in writing in duplicate in the prescribed form2 and verified in the prescribed manner to the effect that the goods referred to in column (2) of the aforesaid Table are to be utilised for the purposes of manufacturing, processing .....

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tion (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 utilised for the purposes of manufacturing, processing or producing articles or things and not for trading purposes shall be in Form No. 27C and shall be verified in the manner indicated therein. (2) The declaration referred to in sub-rule (1) shall be furnished in duplicate to the person responsible for collecting tax. (3) The person referred to in sub-rule (2) sha .....

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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 when a sale is affected. A reading of sub section (1B) clearly brings out this since obligation of the assessee to file a copy of the declaration arises only when t .....

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h Court in the case of Adisankar Spinning Mills (P) Ltd., (supra). 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 Hon ble Madras High Court. Proceedings on the assessee for the alleged default here were initiated on 10/10/2011 and assessee had before 31/10/2012 filed the Forms. Assessment years involved were assessment yea .....

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resaid shows that the Tribunal has interpreted the provisions of Section 206-C(1a) of the Income Tax Act by observing that, the assessee can furnish the declaration only when it is so furnished to him by the buyer. As such, the liability of the assessee to supply the declaration to the assessing officer as provided under sub-Section 1-B of Section 206 of the Act is considered. Therefore, if the declaration is not furnished by the buyer, naturally the assessee will not be in a position to supply .....

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