Bajaj Hindustan Ltd, V. ITO (TDS & Sur.),

ITA 1652/DEL/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2379 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 21-12-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 01-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANT KUMAR
• Assessee Lawyers: N K GARG; PRAVEEN BANSAL
• Keywords: TDS
• Section: 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G: NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER & SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NOS. 1738/DEL/2008 &1652/DEL/2008 ASSESSMENT YEARS: 2005-06 & 2006-07 BAJAJ HINDUSTHAN LTD. SUGAR DIVISION - KINAUNI, KINAUNI KAITWADI LINK ROAD, KINAUNI, MEERUT VS. INCOME TAX OFFICER (TDS & SURVEY), AAYKAR BHAWAN, BHAISALI GROUND, MEERUT 250 001 PAN : AAACB 4351 J ITA NOS. 2180/DEL/2008 & 2181/DEL/2008 ASSESSMENT YEARS: 2005-06 & 2006-07 INCOME TAX OFFICER (TDS & SURVEY), AAYKAR BHAWAN, BHAISALI GROUND, MEERUT 250 001 VS. BAJAJ HINDUSTHAN LTD. SUGAR DIVISION - KINAUNI, KINAUNI KAITWADI LINK ROAD, KINAUNI, MEERUT (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRAVEEN BANSAL & SHRI N.K. GARG RESPONDENT BY : SHRI JAYANT KUMAR, SR. DR O R D E R PER: BENCH THESE ARE FOUR CROSS APPEALS, FILED BY THE ASSESSE E AS WELL BY THE REVENUE, PERTAINING TO THE ASSESSMENT YEARS 2005-06 AND 2006-07 RESPECTIVELY. ITA NOS. 1738/DEL/2008 &1652/DEL/2008 ITA NOS. 2180/DEL/2008 & 2181/DEL/2008 PAGE 2 OF 6 2. THESE FOUR CROSS APPEAL ARE FILED BY THE ASSESSE E AS WELL AS BY THE REVENUE AGAINST THE COMMON ORDER DATED 19.03.2008 P ASSED BY THE LD. CIT(A) IN THE MATTER OF AN ORDER PASSED U/S. 206C O F THE INCOME TAX ACT, 1961 (THE ACT) BY THE AO FOR THE ASSESSMENT YEARS 2005-06 AND 2006- 07 RESPECTIVELY. 3. IN THE APPEAL OF THE ASSESSEE, THE ASSESSEE HAS TAKEN A GROUND THAT THE CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE AO IN HOLDING THAT PRESS MUD IS COVERED BY THE DEFINITION OF SCRAP, AND AS SUCH THE ASSESSEE IS LIABLE TO COLLECT TAX AT SOURCE IN RES PECT OF SALE OF PRESS MUD. 4. IN THE DEPARTMENTAL APPEAL, THE REVENUE HAS TAKE N A GROUND THAT THE CIT(A) HAS ERRED IN VACATING THE LIABILITY IMPOSED BY THE AO U/S. 206C OF THE ACT IN RESPECT OF THE SALE OF BAGASSE BY NOT TREATING THE SAME AS SCRAP WITHIN THE MEANING OF SECTION 206C OF THE A CT. 5. FROM THE GROUNDS OF APPEAL RAISED BY THE ASSESSE E AS WELL AS BY THE REVENUE, THE ISSUE THAT ARISES FOR OUR CONSIDERATIO N IS WHETHER PRESS MUD AND BAGASSE ARE TO BE TREATED AS SCRAP WITHIN THE M EANING OF SECTION 206C OF THE ACT, SO AS TO IMPOSE A LIABILITY UPON THE AS SESSEE TO COLLECT TAX AT SOURCE ON SALE OF AFORESAID TWO ITEMS VIZ., PRESS M UD AND BAGASSE. 6. IN THIS CASE, THE AO PASSED THE ORDER U/S. 206C OF THE ACT BY HOLDING THAT THE ASSESSEE HAS FAILED TO COLLECT THE TAX AT SOURCE IN RESPECT ITA NOS. 1738/DEL/2008 &1652/DEL/2008 ITA NOS. 2180/DEL/2008 & 2181/DEL/2008 PAGE 3 OF 6 OF SALE OF PRESS MUD AND BAGASSE SOLD BY THE ASSESS EE DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEARS 2005-06 AND 2006-0 7 RESPECTIVELY. THE AO ALSO LEVIED INTEREST U/S. 201(1A) IN ADDITION TO THE RAISING OF DEMAND OF AMOUNT LIABLE TO BE COLLECTED AT SOURCE U/S. 206 C OF THE ACT. 7. ON AN APPEAL, THE CIT(A) HELD THAT THE SALE OF B AGASSE IS NOT COVERED BY THE EXPRESSION SCRAP WITHIN THE MEANIN G OF SECTION 206C OF THE ACT BUT, THE ITEM PRESS MUD IS COVERED BY THE DEFINITION SCRAP WITHIN THE MEANING OF SECTION 206C OF THE ACT, AND THE ASSESSEE WAS LIABLE TO COLLECT TAX AT SOURCE ON THE SALE OF PRES S MUD. 8. HENCE, BOTH THE ASSESSEE AS WELL AS REVENUE ARE IN APPEAL BEFORE US. 9. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y PERUSED THE ORDERS OF THE AUTHORITIES BELOW. 10. IN THE COURSE OF HEARING OF THIS APPEAL, THE LD . COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE WHETHER PRESS MUD AND BAGASSE ARE TO BE TREATED AS SCRAP WITHIN THE MEANING OF SECTIO N 206C OF THE ACT HAD COME FOR CONSIDERATION BEFORE THE INCOME TAX APPELL ATE TRIBUNAL, AMRITSAR BENCH (CAMP AT MEERUT) IN THE CASE OF M/S. MAWANA SUGAR WORKS, MEERUT VS. INCOME TAX OFFICER, TDS & SURVEY, MEERUT (ITA NO. 99/DEL/2008 AND ITA NO. 266/DEL/2008 FILED BY THE A SSESSEE AND THE REVENUE RESPECTIVELY), WHERE THE TRIBUNAL HAD TAKEN A VIEW THAT BOTH ITA NOS. 1738/DEL/2008 &1652/DEL/2008 ITA NOS. 2180/DEL/2008 & 2181/DEL/2008 PAGE 4 OF 6 BAGASSE AND PRESS MUD ARE NOT COVERED WITHIN THE DE FINITION OF SCRAP AS GIVEN IN THE EXPLANATION (B) TO SECTION 206C OF THE ACT. A COPY OF THE TRIBUNALS ORDER HAS BEEN PLACED BEFORE US AND A CO PY THEREOF HAS BEEN PROVIDED TO THE LD. DR. 11. BOTH THE PARTIES WERE HEARD AND THE ORDER OF TH E TRIBUNAL REFERRED TO ABOVE HAVE BEEN PERUSED. 12. THE ITAT, IN THE ABOVE REFERRED CASE OF M/S. MA WANA SUGAR WORKS HAS DISCUSSED AND DECIDED THE ISSUE BY OBSERV ING AND HOLDING AS UNDER:- 5. APROPOS PRESSED MUD, THE LEARNED D.R. HAS CONTEN DED THAT SCRAP MEANS WASTE AND SCRAP, THAT AS PER EXP LANATION (B) OF SECTION 206C OF THE ACT, SCRAP MEANS WASTE AND SCRAP PRODUCED FROM THE MANUFACTURE OR MECHANICAL WORKING OF MATERIALS, WHICH IS DEFINITELY NOT USEABLE AS SUCH; THAT THE PRESSED MUD IS NOT USED AS SUCH, IT IS USED IN THE MANUFACTURING OF LIME; AND THEREFORE, IT IS WELL CO VERED IN THE SAID DEFINITION SCRAP, AS RIGHTLY HELD BY THE LEA RNED CIT(A). 6. APROPOS BAGASSE, THE LEARNED D.R. HAS CONTENDED THAT THE ASSESSEE IS NOT USING BAGASSE AS SUCH, BUT IT I S USING IT IN THE MANUFACTURE OF PAPER; THAT THEREFORE, BAGASSE I S ALSO COVERED IN THE DEFINITION OF SCRAP; AND THAT THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT BAGASSE IS NOT TO BE COVERED FOR THE PURPOSE OF SECTION 206C OF THE ACT. 7. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, HAS SUBMITTED THAT BOTH PRESSED MUD AND BAGASSE ARE NOT COVERED WITHIN THE DEFINITION OF SCRAP UNDER SECT ION 206C OF THE ACT; THAT AS NOTED BY THE A.O HIMSELF, BOTH PRESSED MUD AS WELL AS BAGASSE ARE USED, THOUGH THE DIFFERENT P URPOSE, I.E. PRESSED MUD IS USED IN THE MANUFACTURING OF LIME, W HEREAS BAGASSE IS USED IN THE MANUFACTURE OF PAPER; AND TH AT THEREFORE, OBVIOUSLY, NEITHER OF THESE ITEMS IS SC RAP. ITA NOS. 1738/DEL/2008 &1652/DEL/2008 ITA NOS. 2180/DEL/2008 & 2181/DEL/2008 PAGE 5 OF 6 8. HAVING CONSIDERED THE RIVAL CONTENTIONS, WE FIND THAT BOTH BAGASSE AS WELL AS PRESSED MUD ARE NOT COVERED WITHIN THE DEFINITION OF SCRAP AS GIVEN IN THE EXPLANATI ON (B) TO SECTION 206C OF THE ACT. AS FOUND BY THE A.O., BAG ASSE IS USED IN THE MANUFACTURE OF PAPER, WHEREAS PRESSED M UD IS USED IN THE MANUFACTURE OF LIME. THEY ARE USED IN THESE RESPECTIVE MANUFACTURES AS SUCH. THEREFORE, THE CONTENTION OF THE ASSESSEE IS CORRECT. THE LEARNED CIT(A) HA S CORRECTLY HELD THAT BAGASSE CANNOT BE TERMED AS SCRAP. HOW EVER, WITH REGARD TO PRESSED MUD, THE LEARNED CIT(A) FAIL ED TO SEE THAT THIS ITEM IS ALSO NOT SCRAP AND IS USED IN THE PROCESS OF MANUFACTURE OF LIME. THEREFORE, IT ALSO CANNOT BE TERMED AS SCRAP. WE HOLD ACCORDINGLY. 9. IN THE RESULT, ITA NO. 99(DEL)/2008 FILED BY THE ASSESSEE IS ALLOWED, WHEREAS ITA NO. 266(DEL)/2008 FILED BY THE DEPARTMENT IS DISMISSED. 13. SINCE THE ISSUE IS COVERED BY THE DECISION OF C O-ORDINATE BENCH AND NO OTHER DECISION TO THE CONTRARY HAS BEEN BROUGHT TO OUR KNOWLEDGE, WE ARE INCLINED TO DECIDE THESE APPEALS BY FOLLOWING T HE DECISION OF CO- ORDINATE BENCH IN THE ABOVE REFERRED CASE OF M/S. M AWANA SUGAR WORKS. IN THE LIGHT OF THE ABOVE REFERRED DECISION OF THE TRIBUNAL IN THE CASE OF M/S. MAWANA SUGAR WORKS, WE, THEREFORE, HOLD THAT N EITHER BAGASSE NOR PRESS MUD ARE COVERED BY THE EXPRESSION SCRAP AS DEFINED IN THE EXPLANATION (B) TO SECTION 206C OF THE ACT, AND AS SUCH THE ORDER OF THE AO IN RAISING THE DEMAND U/S. 206C ALONGWITH INTERE ST U/S. 201(1A) IS HERE BY VACATED IN RESPECT OF BOTH THE ITEMS I.E. B AGASSE AS WELL AS PRESS MUD. ITA NOS. 1738/DEL/2008 &1652/DEL/2008 ITA NOS. 2180/DEL/2008 & 2181/DEL/2008 PAGE 6 OF 6 14. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ARE ALLOWED WHEREAS THE APPEALS FILED BY THE DEPARTMENT ARE DISMISSED 15. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 23 RD DAY OF DECEMBER, 2009. (K.D. RANJAN) ACCOUNTANT MEMBER (C.L. SETHI) JUDICIAL MEMBER DATED: 23 RD DECEMBER, 2009. *NITASHA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. BY ORDER DEPUTY REGISTRAR