The ITO,TDS-4, Ahmedabad V. Priya Blue Industries Pvt.Ltd., Bhavnagar

ITA 2207/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89438 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 02-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Non compliance
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD , BEFORE SHRI SHAILEND RA KUMAR YADAV, JUDI CIAL MEMBER, AND SHRI ANIL CHATURVEDI , ACCOUNTANT MEMBER . ITA. NO. 2 2 0 7 /AHD/20 11 (ASSES SMENT YEAR: 200 6 - 0 7 ) INCOME - TAX OFFICER , TDS - 4, AHMEDABAD APPELLANT VS. M/S. PRIYA BLUE INDUSTRIES PVT. LTD. 1563/A, AASHIRWAD RUPANI, SARDANAGAR ROAD, BHAVNAGAR RESPONDENT PAN: AA BCP2808B / BY APPELLANT : SMT. SONIA KUMAR, SR.D.R. / BY RESPONDENT : SHRI TUSHAR HEMANI , A.R. / DATE OF HEARING : 2 2 . 0 4 .2015 / DATE OF PRONOUNCEMENT : 14. 0 5 .201 5 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THI S APPEAL HAS BEEN FILED BY REVENU E AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - XXI , AHMEDABAD, DATED 2 7 .0 6 .2011 FOR A.Y. 200 6 - 0 7 ON THE FOLLOWING GROUND: I T A NO. 2 2 07 /AHD/ 11 A.Y. 200 6 - 0 7 [ ITO, TDS - 4 VS. M/S. PRIYA BLUE INDUSTRIES PVT. LTD. ] PAGE 2 1. THE LD.CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN DELETING THE ORDER PASSED U /S.201 (1) OF THE I.T. ACT OF RS. 40,16,418/ - AND INTERE ST CHARGE UNDER SECTION 201 (1A) OF THE I.T. ACT OF RS. 23,29, 5 22/ - EVEN THOUGH THE DECISION RELIED UPON BY THE CIT(A) I.E. NAVIN FLOURINE INTERNATIONAL LTD. IS NOT APPLICABLE TO THE FACTS OF T HIS CAS E AS PRODUCTS IN THE BOTH THE CASES ARE WELL DISTINGUISHABLE. 2. ASSESSING OFFICER ON VERIFICATION OF CASE RECORDS FOUND THAT DURING A.Y. 05 - 06 ASSESSEE HAD MADE SALES OF SCRAP WORTH RS.35,79,69,613/ - . HOWEVER, NO DOCUMENT/PAPERS LEADING TO COLLECTION O F TAX AT SOURCE ON SALE OF SCRAP AND PAYMENT THEREOF TO THE CREDIT OF CENTRAL GOVERNMENT ACCOUNT AND OR PRODUCTION OF CERTIFICATE IN FORM NO.27C. ACCORDING TO ASSESSING OFFICER, A SSESSEE WAS UNDER OBLIGATION TO COLLECT FROM BUYER OF SCRAP, A SUM AT 1% AS INCOME TAX + SC + EC. SECTION 206C(7). FURTHER PROV I D E S THAT IF THE SELLER DOES NOT COLLECT TAX OR AFTER COLLECTING THE TAX FAILS TO PAY IT, HE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT 1% FROM THE DATE ON WHICH SUCH TAX WAS COLLECTIBLE TO THE DATE ON WH ICH THE TAX IS ACTUALLY PAID OFF. FOR NON COMPLIANCE OF PROVISIONS OF SECTION 206C OF THE ACT R.W. RULE 37C OF THE INCOME TAX RULES, 1961, ASSESSEE WAS LIABLE TO PAY TAX AND INTEREST THEREON . A SHOW CAUSE NOTICE WAS ISSUED ON 16.09.2010 WHICH WAS RETURNE D BY POSTAL AUTHORITY WITH REMARKS LEFT. ACCORDINGLY, DEMAND U/S. 201(1) AND INTEREST THEREON OF RS.40,16,418/ - AND RS.23,29,522/ - RESPECTIVELY, TOTALLING TO RS.63,45,940/ - WAS RAISED. 2.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, WHEREI N VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF ASSESSEE I T A NO. 2 2 07 /AHD/ 11 A.Y. 200 6 - 0 7 [ ITO, TDS - 4 VS. M/S. PRIYA BLUE INDUSTRIES PVT. LTD. ] PAGE 3 AND HAVING CONSIDERED THE SAME, CIT(A) ALLOWED PENALTY. SAME HAS BEEN OPPOSED ON BEHALF OF REVENUE INTER ALIA STATING THAT CIT(A) WAS NOT JUSTIFIED IN DELETING ORDER PASSED U/S. 201(1) OF THE ACT OF RS.40,16,418/ - AND INTEREST THEREON U/S. 201(1A) OF RS.23,29,522/ - . ABOVE DECISION RELIED BY CIT(A) I.E. NAVINE FLRORINE INTERNATIONAL LTD. VS. ACIT, TDS CIRCLE, SURAT WAS NOT APPLICABLE TO THE FACTS OF THIS CASE AS PRODUCT IN BOTH CASES WERE WELL DISTING UISHABLE. ACCORDINGLY, REQUESTED TO SET ASIDE THE ORDER OF CIT(A) AND RESTORE THAT OF ASSESSING OFFICER ON THE ISSUE . ON OTHER HAND, LEARNED AUTHORIZED REPRESENTATIVE SUPPORTED THE ORDER OF CIT(A). 2.2 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATERIA L ON RECORD, WE FIND THAT ASSESSEE IS ENGAGED IN SHIP BREAKING BUSINESS AND HAS MADE SALE OF GOODS AMOUNTING TO RS.47, 40, 27,431/ - . DURING YEAR UNDER ASSESSMENT, THE SALE INCLUDES FINISH GOODS RECOVERED FROM SHIP BREAKING ACTIVITY AND TRADING GOODS. ASSES SING OFFICER HAS TREATED THE TOTAL SALE OF GOODS AS SCRAP WITHIN MEANING OF SECTION 206 OF THE ACT AND ON THAT BASIS, HE HAS PASSED THE ORDER INTER ALIA STATING THAT ASSESSEE HAS FAILED TO DEDUCT TAX COLLECTED AT SOURCE U/S.206C OF THE ACT AND LIABLE TO PA Y PENALTY OF RS.40,16,418/ - U/S. 201(1) OF THE ACT AND INTEREST OF RS.23,29,522 U/S. 201(1A) OF THE ACT. THE PROVISION OF SECTION 201 OF THE ACT READS AS UNDER: 201. OF INCOME - TAX ACT: CONSEQUENCES OF FAILURE TO DEDUCT OR PAY. (1) WHERE ANY PERSON, INCLU DING THE PRINCIPAL OFFICER OF A COMPANY, I T A NO. 2 2 07 /AHD/ 11 A.Y. 200 6 - 0 7 [ ITO, TDS - 4 VS. M/S. PRIYA BLUE INDUSTRIES PVT. LTD. ] PAGE 4 (A) WHO IS REQUIRED TO DEDUCT ANY SUM IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT, OR (B) REFERRED TO IN SUB - SECTION (1A) OF SECTION 192, BEING AN EMPLOYER, DOES NOT DEDUCT, OR DOES NOT PAY, OR AFTER SO DEDUCTI NG FAILS TO PAY, THE WHOLE OR ANY PART OF THE TAX, AS REQUIRED BY OR UNDER THIS ACT, THEN, SUCH PERSON, SHALL, WITHOUT PREJUDICE TO ANY OTHER CONSEQUENCES WHICH HE MAY INCUR, BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX: PROVIDED THAT NO PENALTY SHALL BE CHARGED UNDER SECTION 221 FROM SUCH PERSON, UNLESS THE ASSESSING OFFICER IS SATISFIED THAT SUCH PERSON, WITHOUT GOOD AND SUFFICIENT REASONS, HAS FAILED TO DEDUCT AND PAY SUCH TAX (2) ............... (3) NO ORDER SHALL BE MADE UNDER SUB - S ECTION 11) DEEMING A PERSON TO BE AN ASSESSEE IN DEFAULT FOR FAILURE TO DEDUCT THE WHOLE OR ANY PART OF THE TAX FROM A PERSON RESIDENT IN INDIA, AT ANY TIME AFTER THE EXPIRY OF (I) TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE STATEMENT IS FI LED IN A CASE WHERE THE STATEMENT REFERRED TO IN SECTION 200 HAS BEEN FIFED; (II )F OUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH PAYMENT IS MADE OR CREDIT IS GIVEN, IN ANY OTHER CASE: PROVIDED THAT SUCH ORDER FOR A FINANCIAL YEAR COMMENCING ON OR B EFORE THE 1ST DAY OF APRIL, 2007 MAY BE PASSED AT ANY TIME ON OR BEFORE THE 31 ST DAY OF MARCH, 2011. 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. WAST E & SCRAP OF CASTIRON 3. WASTE & SCRAP OF COPPER 4. WASTE & SCRAP OF IRON & STEEL I T A NO. 2 2 07 /AHD/ 11 A.Y. 200 6 - 0 7 [ ITO, TDS - 4 VS. M/S. PRIYA BLUE INDUSTRIES PVT. LTD. ] PAGE 5 5. WASTE & SCRAP OF STAINLESS STEEL 6. WASTE & SCRAP, OF NICKET 7. WASTE&SCRAPOFGM, GUM, COP, GER.ALU.PRO ASSESSEE HAS NO T COLLECTED TCS ON FOLLOWING TYPE OF ITEMS SOLD DUR ING THE YEAR: 1. OL D & 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/20 10 DATED 15.02.2011 IN CASE OF NAVINE FLUORINE INTERNATIONAL LTD VS. ACIT, T DS CIRCLE SURAT, FOR A Y 2009 - 10 & 2010 - 11, INTER ALIA HELD TH A T T ERM '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 HAVE NEXUS WITH MANUFACTURI NG OR MECHANICAL WORKING OF MATERIALS. THEREFORE, THE WORD USED IS 'WHICH IS' DEFINITELY NOT USABLE. THE WORD 'IS' AS USED IN THIS DEFINITION OF THE SCRAP MEANT FOR SINGULAR ITEM I.E. 'WASTE AND SCRAP' . AS STATED ABOVE, ASSESSEE IS ENGAGED IN SHIP BREAKIN G ACTIVITY AND AS GIVEN TO UNDERSTAND THESE ITEMS/ PRODUCTS IN QUESTION ARE FINISHE D PRODUCTS OBTAINED FROM THE ACT IVITY. TH EY CONSTITUTE SIZABLE CHUNK OF PRODUCTION DONE BY SHIP BREAKERS. T HOUGH SUCH PRODUCTS MAY BE COMMERCIALLY KNOWN AS 'SCRAP' THEY ARE DEFINITELY NOT 'WASTE AND SCRAP'. T HE ITEMS IN QUESTION ARE 'USABLE AS SUCH' AND THEREFORE DOES I T A NO. 2 2 07 /AHD/ 11 A.Y. 200 6 - 0 7 [ ITO, TDS - 4 VS. M/S. PRIYA BLUE INDUSTRIES PVT. LTD. ] PAGE 6 NOT FALL WITH IN 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 RELI EF TO ASSESSEE UNDER THE PROVISION OF 206C(1) OF ACT, W ITH REGARDS TO ONLY SALE OF SCRAP ARISING OUT OF MANUFACTURING ACTIVITY IN COURSE OF SHIP BREAKING AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO ASSESSEE. 3 . IN THE RESULT, APPEAL FILED BY REVENU E IS ALLOWED FOR STATISTICAL PURPOSE . PRONOUNCED IN THE OPEN COURT ON THIS THE 14 TH DAY OF MAY , 201 5 . SD/ - SD/ - (ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 14 /0 5 /2015 TRUE COPY S.K.SIN HA / COPY OF ORDER FORWARDED TO: - 1. / REVENUE 2. / ASSESSEE 3. / CONCERNED CIT 4. - / CIT (A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. BY ORDER / , / ,