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TMI Blog2016 (10) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1961 in the Asstt.Years 2011-12 to 2013-14 respectively. 3. Brief facts of the case are that survey under section 133A of the Act was carried out at the premises of the assessee on 31.1.2013. During the course of survey, it revealed to the Department that the assessee was engaged in the business of trading in iron, steel scrap, MS pipe, other non-ferrous scrap, ship scrap materials & machineries. According to the Revenue, assessee was supposed to collect tax at source at the rate of 1% of the sale, and it was required to be deposited in the government account before the date as per Section 206C of the Income Tax Act. In case scrap sale is made to a manufacturer or actual user, then TCS was not required to be deducted provided a decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ising out of manufacturing activity in the course of ship breaking. As far as sale of other items was concerned, the Tribunal held that these items did not fall within the ambit of definition "scrap". This order of the Tribunal passed in ITA No.2207/Ahd/2011 has been upheld by the Hon'ble Gujarat High Court in Tax Appeal No.604 of 2015. The judgment of Hon'ble High Court reported in 381 ITR 210. On the strength of this decision, the ld.counsel for the assessee contended that though in the invoice "scrap" is being mentioned, but assessee has not sold any scrap which was generated out of manufacturing activity undertaken by the assessee. The assessee has sold items which were re-usable products in a ship breaking activity. These items are "sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sold during the year: "1. Old & 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 Fluorine International Ltd Vs. ACIT, TDS Circle Surat, for A Y 2009-10 & 2010- 11, inter alia held that term "waste and scrap" are one item. The "waste and Scrap" must be from manufacture or mechanical working of material which is definitely not usable as such because of breakage, cutting up, ware and to other reasons. It would mean that these waste and scrap being one item should arise from manufacture or mechanical working of material. The words waste and scrap should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sable (exempted) like furniture, wood, etc. 3. Trading of scrap (melting) 4. High seas sale. 6. The Tribunal, after considering the definition of scrap under clause (b) to section 206C of the Act, has noted that the assessee is engaged in ship breaking activity and the items in question are finished products obtained from the activity and constitute sizeable chunk of production done by ship breakers. Though such products may be commercially known as "scrap" they are not "waste and scrap", as such items are usable as such, and, therefore, do not fall within the definition of scrap as envisaged in the Explanation to section 206C(1) of the Act. 7. Section 206C of the Act bears the heading, "Profits and gains from the business of tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 has remitted the matter to the Assessing Officer to grant relief accordingly. Essentially, therefore, the impugned order of the Tribunal is based upon a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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