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TMI Blog2016 (1) TMI 1110X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 and assessee's Cross Objection No.50/RJT/2015. We find that the above stated appeal raises following substantive grounds :- "1. The Ld. CIT(A) has erred in law as well as on facts in law in deleting the additions made u/s.206C(1) of the I.T. Ac on account of non-collection of TCS on sale of scrap and interest charged u/s.206C(7) in spite of the fact that the assessee was trader of scrap and the provision of section 206C(1) apply to the assessee. 2. The Ld. CIT(A) has erred in law as well as on facts in issue of direction in violation of proviso to sub sec. (7) of section 206C of I.T. Act to the A.O. that interest should be calculated only in respect of those buyers who have not paid tax due on the returned income whereas "Interest should be calculated in case of all buyers, who have filed Form No.27BA" as provided in the above section. 3. The ld. CIT(A) has erred n law s well as on facts in directing not to treat the assessee in default for non collection of TCS on sale of scrap to manufacturer where Form No.27C have been filed with the department even though the same were filed inordinately late and after the detection of default by the Department. 4. The ld. CIT(A) has erre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law as well as on facts in holding that the High Seas sales made by the respondent is falling within the definition of scrap and applied the provisions of section 206C of the Act. 6. The learned Income Tax Officer, TDS-3, Jamnagar as well as the Honourable Commissioner of Income Tax (appeals), Jamnagar has erred in law as well as in holding that high sea sale is covered within the meaning of Section 206C. They failed to appreciate the fact that the goods has never reached to Indian costal territory and the goods are sold outside the territory of India. Thus, even otherwise the sale made by the respondent is not falling within the coverage of section 2066C of the Act. 7. The learned Income Tax Officer, TDS-3, Jamnagar as well as the Honourable Commissioner of Income Tax (appeals), Jamnagar has erred in law as well as in facts while working out the figure of sale of scrap as Rs. 57,99,82,656/- which is actually high seas sales and the aid issue is already decided in the earlier years in respondent's favour and the same cannot be again taken up without issuing proper notice under the Act." 4. Both parties reiterated their respective pleadings during the course of hearing. They ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted tax at source for the reasons already indicated hereinabove. He, thereafter, took notice of the fact that the relevant title to section 206(1) contained crucial expression "profit and gains from the business of trading ......... in scrap etc." He disagreed with assessee's claim of having acted under bonafide belief. All this resulted in the impugned tax collected at source (TCS) demand of Rs. 82,93,752/- being raised in order dated 17.10.2014. 7. The assessee preferred appeal. It's first contention was that section 206C of the Act did not apply in scrap trader's case as stated in the course of assessment proceedings. The CIT(A) has turned down the same by placing reliance on the above stated Special Bench decision in the case of M/s Bharti Auto Products, holding as under :- "35. In the matter under appeal before us, the assessee himself has declared the goods imported by him as brass scrap before the Customs authorities. He is therefore bound by that declaration. Once it is declared as waste and scrap under the Customs Tariff Act, it necessarily follows that it is in the nature of waste and scrap, which is definitely not usable as such. Be that as it may, the definiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from they have obtained the declaration in Form No. 27C at the time of sale. However, the same has not been submitted to the office CIT, Jamnagar in time. As per section 206C(1B), the person responsible for collecting tax under this section, i.e. the seller, shall submit a copy of the declaration to the Chief Commissioner or Commissioner on or before seventh day of the month following the month in which declaration is furnished. In the appellant's case, it is seen from the paper book that the appellant submitted the declaration in Form No. 27C to the office of the CIT may be late. The submission of form no. 27C by the appellant is also confirmed by the AO in his order but the same was filed late it was not considered by him and he has held the assessee in default and the accordingly demand is raised. I have gone through the facts and submission made available mere late submission of such forms to the office of CIT cannot make appellant as assessee in default and they cannot be held liable for TCS. I agree with contention raised by the appellant by placing reliance on the recent decision of the Hon'ble ITAT Bench, Ahmedabad in the case of K. P. G. Enterprise vs. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled by them. Thus, the grounds no. 9, 10 & 11 are allowed. 9. The ground no. 12 covers the aspect of chargeability of interest. Since the assessee is not liable for TCS as the sales for the period is to the manufacture and Form No. 27 C is filed the appellant is not liable to collect TCS and accordingly there is no demand there is no liability of interest on the appellant and thus this ground no. 12 is allowed." 9. This leads both the parties aggrieved. The Revenue's case is that the CIT(A) has erred in accepting the assessee's argument on merit submitting belated Form No.27C along with consequential interest. The assessee's grievance on the other hand raises a legal plea of non applicability of section 206C in its scrap trading sales. We make it clear in Revenue's appeal that there is no substantive ground challenging lower appellate findings in paragraph no.8 of the CIT(A)'s order clarifying that a part of its high seas sales is already covered in earlier survey. There is also no dispute about the fact that the assessee has belatedly submitted relevant Form No.27C collected from its buyers. The same were placed on record before the Assessing officer itself who declined to acce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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