TMI Blog2016 (10) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... a trader. Therefore, the assessee has not sold scrap as such. He has sold the products resulted from ship breaking activity, which are re-usable. Thus, the assessee was not supposed to collect tax under section 206C of the Act. The ld.AO has erred in raising the demand. Allow all appeals and delete additions. - ITA.No.979, 980 and 1535/Ahd/2015 - - - Dated:- 1-9-2016 - SHRI RAJPAL YADAV, JUDICIAL MEMBER For The Assessee : Shri B.R. Popat, AR For The Revenue : Shri Sumit Kumar Verma, DR ORDER Present three appeals are directed at the instance of the assessee against common order of the ld.CIT(A)-8 dated 20.3.2015 for the Asstt.Years 2012- 13 2013-14 and order dated 24.4.2015 for the Asstt.Year 2011-12. 2. Solitary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is way, he raised demand of ₹ 10,55,845/- in the Asstt.Year 2012-13. On identical principle, calculations have been made in other two years. Appeal to the ld.CIT(A) did not bring any relief to the assessee. 4. The ld.counsel for the assessee, at the very outset, contended that in case of M/s.CIT Vs. Priya Blue Industries P.Ltd., the Tribunal has considered scope of expression scrap provided in the definition in Explanation-b to section 206C of the Act. According to the Tribunal, wastage and scrap generated out of manufacturing activity is to be considered as scrap and if the assessee was engaged in the manufacturing activities, which has risen to scrap then, on sale of that scrap, the tax ought to be collected by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as such because of breakage, cutting up, wear and other reasons . Explanation (b) below Sec.206C(1) has two distinct limbs. Even if one of the limbs is applicable, an assessee can be treated as if he deals in scrpa, not usable as such: (i) scrap means waste; (ii) scrap means scrap generated from the manufacture or mechanical working of materials. 6. The Tribunal has considered this aspect in the case of Priya Blue Industries P.Ltd. who was engaged in the business of ship breaking. The finding recorded by the Tribunal reads as under: 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 CAST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such products may be commercially known as scrap they are definitely not waste and scrap . The items in question are usable as such and therefore does not fall within the definition of scrap as given in of section 206C(1). Having said so, we restore the issue to Assessing Officer with direction to grant relief to assessee under the provision of 206C(1) of Act, with regards to only sale of scrap arising out of manufacturing activity in course of ship breaking after providing due opportunity of hearing to assessee. 7. The finding of the tribunal has been upheld by the Hon ble High Court and the Hon ble High Court has made the following discussion on the issue: 5. From the facts as narrated hereinabove, it is apparent that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the percentage specified in the corresponding entry in column (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 impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at source, the matter has merely been referred to the Assessing Officer for the purpose of examining as to what extent relief is required to be granted to the assessee under the provisions of section 206C(1) of the Act having regard to the findings of fact rendered by it. 8. A perusal of the paragraph-6 of the above judgment, would indicate that certain items generated out of ship breaking activity might be known commercially as scrap but they are not waste and scrap. These items are reusable as such, and therefore, would not fall within the definition of scrap as envisaged in the Explanation to section 206C(1). The assessee has also contended that it was engaged in the sale of MS pipe, iron which were obtained from ship breaki ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
