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2017 (1) TMI 1039 - BOMBAY HIGH COURT

2017 (1) TMI 1039 - BOMBAY HIGH COURT - TMI - Seeking recovery of the tax, interest and penalty under the provisions of Section 206C - Held that:- A finding of fact is recorded by the Commissioner of Income Tax, that the tribals are engaged only as labourers to collect the forest produce that is secured by the Corporation. In any case, since a tribal individual cannot be included within the meaning of the term “seller”, the case of the petitioner that the tribal individual was the first seller a .....

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lesser percentage than that is specified in the entry in column (3) of the table. Though the petitioner-Corporation was liable to collect tax at source at 15%, the petitioner-Corporation had collected the same at 5% only and that resulted in the imposition of interest and penalty on the petitioner-Corporation. We do not find any illegality in the action on the part of the Assistant Commissioner of Income Tax in directing the petitioner-Corporation to pay the interest and penalty on the short fal .....

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Act, 1961. 2. Demand notices were served on the petitioner-Corporation demanding interest and penalty for short payment of the tax collection at source under the provisions of Section 206C of the Income Tax Act. For the relevant assessment years, the tax collection at source returns were filed by the petitioner-Corporation and it was noticed by the Assistant Commissioner of Income Tax, (Tax Deduction at Source Circle), Nagpur that the petitioner had not collected the tax at source at the rate p .....

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the impugned order, the Commissioner of Income Tax dismissed the revision filed by the petitioner and upheld the action of the Assistant Commissioner of Income Tax. The order of the Commissioner of Income Tax, Nagpur is challenged by the petitioner in the instant petition. 3. Shri M.V. Samarth, the learned Counsel for the petitioner-Corporation submitted that the provisions of Section 206C of the Income Tax Act could not have been applied to the case of the petitioner as the petitioner-Corporat .....

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is submitted that in view of clause (ii) of Explanation (a), a buyer in the further sale of goods obtained in pursuance of a sale would not be included within the term buyer , as defined in Explanation (a). It is submitted that since the petitioner-Corporation as a second seller was not liable to collect the tax at source, from the buyer to whom the forest produce was sold by auction, the provisions of Section 206C of the Income Tax Act, could not have been applied to the petitioner by the Assi .....

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Tax seeking interest and penalty from the petitioner-Corporation. It is submitted that the case of the petitioner that the petitioner was a second seller was rightly rejected by the Commissioner of Income Tax by referring to the provisions of Section 206C of the Income Tax Act. It is submitted that the word seller , as defined in the explanation to Section 206C of the Income Tax Act, would not include an individual or a HUF and a tribal individual could not fall within the meaning of the term s .....

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206C of the Income Tax Act. The relevant provisions of Section 206C of the Act read thus 206C. (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 cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer of any goods of the nature specified in column (2) of the Table below, a sum equal to the percentage, spe .....

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... …............. …............. …............. Explanation. For the purposes of this section, ( a) buyer means a person who obtains in any sale, by way of auction, tender or any other mode, goods of the nature specified in the Table in subsection (1) or the right to receive any such goods but does not include (i) a public sector company, (ii) a buyer in the further sale of such goods obtained in pursuance of such sale, or (iii) a buyer where the goods are not obtained by h .....

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of the buyer or at the time of receipt of such amount from the said buyer, collect from the buyer of any goods of the nature specified in that section, a sum equal to the percentage specified in the corresponding entry in column (3) of such amount as income tax. Admittedly, the goods of the nature specified in Section 206C of the Income Tax Act are sold by the petitioner-Corporation to third parties by auction. The words buyer and seller are defined in the explanation to Section 206C of the Inc .....

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the petitioner-Corporation is that the Corporation is the second seller wheres the tribal individual from whom the petitioner-Corporation has secured the goods specified in column (2) of the table under Section 206C of the Income Tax Act is the first seller. In view of clause (b) of the explanation a seller means the Central Government, State Government or any local authority, company, firm or cooperative society. The Commissioner of Income Tax has, therefore, rightly held that the petitioner-C .....

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We are afraid that such is not the import of the provisions of Section 206C of the Income Tax Act. There is no scope for giving second thought to the said submission made on behalf of the petitioner in view of the definition of the terms buyer and seller under the explanation under Section 206C of the Income Tax Act. A finding of fact is recorded by the Commissioner of Income Tax, that the tribals are engaged only as labourers to collect the forest produce that is secured by the Corporation. In .....

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