The ITO, TDS-3, JAMNAGAR V. Shri Deepakkumar R. Baldi, JAMNAGAR

ITA 357/RJT/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2357 (ITAT-RAJKOT)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 16-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAIDEEP MEHTA V K CHAKRAVARTY
• Keywords: Retrospective amendment
• Section: 11

Judgement Text

ITA NO .328 AND 357 / RJT/201 5 A.Y S . 2010 - 11 PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (CONDUCTED THROUGH E - COURT AT AHMEDABAD) [CORAM: PRAMOD KUMAR AM AND KUL BHARAT JM ] ITA NO. 328 /RJT/201 5 ASSESSMENT YEAR 2010 - 11 DEEPAK KUMAR RAMESHWARLAL BALDI .......... ...... ... .. . . .... APP ELLANT SPL. SHED NO.439/2, GIDC, SHANKER TEKRI, UDYOGNAGAR, JAMNAGAR. [PAN: A BUPB 3562 D ] VS. I NCOME TAX OFFICER . .......... .... ...... ..................RESPONDENT TDS - 3, JAMNAGAR. ITA NO.357/RJT/2015 ASSESSMENT YEAR 2010 - 11 INCOME TAX OFFI CER .......... ...... ... .. . .....APP ELLANT TDS - 3, JAMNAGAR. VS. DEEPAK KUMAR RAMESHWARLAL BALDI . .......... ............................RESPONDENT SPL. SHED NO.439/2, GIDC, SHANKER TEKRI, UDYOGNAGAR, JAMNAGAR. [PAN: A BUPB 3562 D ] APPEARANCES BY : JAIDEEP MEHTA F OR THE A SSESSEE V.K. CHAKRAVARTY FOR THE R E VENUE DATE OF CONCLUDING THE HEARING : DECEMBER 31 ST , 201 5 DATE OF PRONOUNCING THE ORDER : JANUARY 19 TH , 2016 O R D E R PER PRAMOD KUMAR AM: ITA NO .328 AND 357 / RJT/201 5 A.Y S . 2010 - 11 PAGE 2 OF 9 1. BY W A Y OF TH ESE CROSS A PPEAL S , THE ASSESSEE, A S ALSO THE ASSESSING OFFICER , HA VE CHALLENGED CORRECTNESS OF THE ORDER DATED 05.05.2015 , PASSED BY THE LD. CIT (A) , IN THE MATTER OF ASSESSMENT UNDER SECTION 206C(6)/206C(7) OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER) , FOR THE ASSESSMENT YEAR 2 010 - 1 1 . 2. IN THE APPE A L FILED BY TH E AS S ESS E E, THE GRIEVANCES RAISED ARE AS FOLLOWS : - ALL THE BELOW MENTIONED GROUNDS OF APPEAL A RE INDEPENDENT AND WITHOUT PREJUDICES TO EACH OTHER : 1. THE LEARNED CIT ( A ) ERRED IN LAW A S WELL AS ON FACTS IN NOT APPRECIAT ING THAT PRODUCTS TRADED BY THE APPELLANT IS NO T SCRAP WITHIN THE DEFINITION OF THE T ERMS AS CONTAINED IN EXPLANATION (B) TO SECTION 206C OF THE ACT. 2. THE LEARNED CIT(A) ERRED IN LAW AS WELL A S ON FACTS IN NOT APPRECIATING THAT CUSTOMERS OF THE APPELL ANT IS NOT BUYERS WITHIN THE DEFINITION OF THE TERMS A S CONTAINED IN EXPLANATION (AA) TO SECTION 206C OF THE A CT. 3. THE L EARNED CI T(A) ERRED IN LAW AS WELL A S ON FACTS IN DIRECTING AO TO CHARGE INTEREST A S APPLICABLE FRO M THE DUE DATE OF DEDUCTION OF T C S TO THE DATE OF FILING RETURN OF INCOME B Y THE BUYERS AS PER PROVISO TO SECTION 206C(7) OF THE ACT. 3 . WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, SHRI JAYDEEP MEHTA , LEARNED COUNSEL FOR THE ASSESSEE, FAIRLY ACCEPTED THAT THE ISSUE RAISED IN THIS APPE AL IS NOW COVERED AGAINST THE ASSESSEE, BY A SPECIAL BENCH OF THIS T RIBUNAL IN THE CASE OF BHARTI A UTO PRODUCTS VS. CIT [)2013) 145 ITD I(SB RAJKOT)], BUT THE MATTER IS REQUIRED TO BE REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR GRANTING HIM AN OPPORT UNITY TO FILE FORMS 27C/27BA, AS THE CASE MAY BE, FOLLOWING THE DIRECTIONS OUT IN THE S PECIAL B ENCH ORDER. HE ALSO INVITED OUR ATTENTION TO THE FOLLOWING WRITTEN SUBMISSIONS AT PAGE NOS.1 TO 5 OF THE P APER B OOK : - GROUND NO. 1 : THE LEARNED CIT(A) ERRED IN LAW AS WELL AS ON FACTS IN NOT APPRECIATING THAT PRODUCTS TRADED BY THE APPELLANT IS NOT 'SCRAP' WITHIN THE DEFINITION OF THE TERMS CONTAINED IN EXPLANATION (B) TO SECTION 206C OF THE ACT. ITA NO .328 AND 357 / RJT/201 5 A.Y S . 2010 - 11 PAGE 3 OF 9 1.1 YOUR APPELLANT IS ENGAGED IN THE TRADING BUSINESS OF NON FERROUS METALS SUCH AS BRASS SCRAP, COPPER SCRAP, ZINC SCRAP AND OTHER METAL SCRAP UNDER HIS PROPRIETARY CONCERN, 'M/S BALDI METALS & ALLOYS'. THESE METAL SCRAPS ARE GENERALLY IMPORTED FROM THE VARIOUS FOREIGN COUNTRIES AND SOLD IN LOCAL MARKETS. YOUR APPELLANT NEVER CONTENDED THAT HE IS NOT DEALING IN SCRAP; HE CONTENDED THAT THE 'SCRAP' WHICH HE DEALS; DOES NOT FALL IN RESTRICTIVE DEFINITION OF 'SCRAP' AS DEFINED IN EXPLANATION (B) TO SEC. 206C. 1.2 EXPLANATION (B) TO SEC. 206C IS REPRODUCED HE REUNDER FOR READY REFERENCE: - (B) 'SCRAP' MEANS WASTE AND SCRAP FROM THE MANUFACTURE OR MECHANICAL WORKING OF MATERIALS WHICH IS DEFINITELY NOT USABLE AS SUCH BECAUSE OF BREAKAGE, CUTTING UP, WEAR AND OTHER REASONS; FROM THE DEFINITION IT IS CLEAR THAT I T WOULD INCLUDE ONLY SUCH WASTE OR SCRAP WHICH ARISES FROM MANUFACTURE OR MECHANICAL WORKING OF MATERIAL. SUCH SCRAP SHOULD NOT BE USABLE AS SUCH. THEREFORE, IT IS CLEAR THAT SUCH SCRAP WHICH IS COVERED U/S 206C IS THE SCRAP WHICH IS GENERATED OUT OF MANUF ACTURING ACTIVITY OR PROCESS CARRIED OUT BY THE SELLER HIMSELF. THUS, EFFECTIVELY THE PROVISION OF THIS SECTION SHALL APPLY TO THE SELLER WHO ARE ENGAGED IN THE BUSINESS OF MANUFACTURING AND PROCESSING AND NOT TO THE APPELLANT LIKE US. IT WOULD ALSO BE POS SIBLE TO VISUALIZE SUCH OTHER SCRAP SALES WHICH ARE NOT COVERED IN THE PURVIEW OF SECTION 206C : - 1. SALE OF OLD NEWSPAPER 2. SALE OF SCRAP OF OLD MACHINERIES 3. SALE OF BUILDING MALBAS BY THE BUILDERS 4. SALE OF UNUSABLE PACKING MATERIAL SUCH AS EMPTIES AND TINS 5. SALE OF GUNNY BAGS CERTAIN TIMES AS A RESULT OF MANUFACTURING PROCESS SOME MATERIAL IS GENERATED WHICH FOR THOSE MANUFACTURERS IS NOT USABLE AS SUCH BUT FOR OTHER SAME IS USABLE AS SUCH THOSE PRODUCTS ARE ALSO NOT COVERED AND THEY ARE GENERALL Y COMMERCIAL KNOWN AS BY - PRODUCTS. 1.3 PARA NO. 22 OF ITAT SB (RAJKOT) DECISION IN CASE OF BHARTI AUTO PRODUCTS IS REPRODUCED FOR READY REFERENCE AS UNDER: - AS RIGHTLY SUBMITTED BY BOTH THE PARTIES THAT IT IS NOT A SOUND PRINCIPLE OF CONSTRUCTION TO BRU SH ASIDE WORDS IN A STATUTE AS BEING INAPPOSITE SURPLUSAGE, IF THEY CAN HAVE APPROPRIATE APPLICATION IN CIRCUMSTANCES CONCEIVABLY WITHIN THE CONTEMPLATION OF THE STATUTE. THE COURTS, IN THE INTERPRETATION OF STATUTES, ALWAYS PRESUME THAT THE LEGISLATURE IN SERTED EVERY PART THEREOF FOR A PURPOSE AND THE LEGISLATIVE INTENTION IS THAT EVERY PART OF THE STATUTE SHOULD HAVE EFFECT. THE LEGISLATURE IS DEEMED NOT TO WASTE ITS WORDS OR TO SAY ANYTHING IN VAIN AND A CONSTRUCTION WHICH CONTRIBUTES REDUNDANCY TO THE L EGISLATURE SHOULD NOT BE ACCEPTED, EXCEPT FOR COMPELLING REASONS. ITA NO .328 AND 357 / RJT/201 5 A.Y S . 2010 - 11 PAGE 4 OF 9 1.4 IN CASE THE LEGISLATURE'S INTENT WAS TO COVER ALL KIND OF 'SCRAP' THEN THIS DEFINITION WOULD NOT HAVE BEEN INSERTED. THE WORD 'MEANS' USED IN THE ABOVE DEFINITION IS USED FOR A PU RPOSE TO RESTRICT THE MEANING. THE SCRAP TRADED BY YOUR APPELLANT IS NOT OUTCOME OF MANUFACTURE OR MECHANICAL WORKING OF MATERIALS. THIS SCRAP IS GENERATED FROM THE DISMANTLING OF CONSTRUCTED RESIDENTIAL BUILDINGS, FACTORIES AND OTHER SUPERSTRUCTURES. HENC E THE 'SCRAP' TRADED BY YOUR APPELLANT IS NOT COVERED BY THE DEFINITION AND ACCORDINGLY SEC. 206C IS NOT APPLICABLE IN YOUR APPELLANT'S CASE. GROUND NO. 2: THE LEARNED CIT(A) ERRED IN LAW AS WELL AS ON FACTS IN NOT APPRECIATING THAT CUSTOMERS OF THE APPEL LANT IS NOT 'BUYER' WITHIN THE DEFINITION OF THE TERMS AS CONTAINED IN EXPLANATION (AA) TO SECTION 206C OF THE ACT. 2.1 IN THE SCENARIO, (I) OF SUBSEQUENT AMENDMENT IN SEC. 206C - EXPLANATION (AA) BY WAY OF INSERTION OF CLAUSE (II) AND ITS IMPA CT ON INTERPRETATION OF CLAUSE (I); (PARA 2.2 TO 2.5) (II) WHERE HON'BLE ITAT SB HAS NOT GIVEN CONCLUSIVE VIEW ON INTERPRETATION OF 'ANY OTHER MODE' (PARA 2.6) (III) WHERE ANALYSIS OF THE TERM 'ANY OTHER MODE' IS EXTENSIVELY DONE BY HON'BLE KARNATAKA HC (PARA 2.7) INTERPRETATION OF THE TERM 'ANY OTHER MODE' IN THE DEFINITION OF 'BUYER' IS OF PARAMOUNT IMPORTANCE AND NEEDS A FRESH ANALYSIS FOR A CONCLUSIVE VIEW. 2.2 DEFINITION OF 'BUYER' AS PER EXPLANATION (AA) TO SECTION 206C RELEVANT PORTION OF EXPLANATION (AA) TO SECTION 206C IS REPRODUCED AS UNDER: - (AA) 'BUYER' WITH RESPECT TO (I) SUB - SECTION (1) 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 SUB - SECTION (1) OR THE RIGHT TO RECEIVE ANY SUCH GOODS BUT DOES NOT INCLUDE, (A) ....... ...... ..... ; OR (B) .. ...........; (II) SUB - SECTION (1D) MEANS A PERSON WHO OBTAINS IN ANY SALE , GOODS OF THE NATURE SPECIFIED IN THE SAID SECTION ; .. ..... ...... 2.3 IN SEC. 206C, THE LEGISLATURE HAS PROVIDED DEFINITION OF THE BUYER. HAD THE INTENTION OF THE LEGISLATION WAS TO INCLUDE EVERY 'BUYER'; THE DEFINITION IS NOT REQUIRED AT ALL. HAD THE INTENTION OF THE LEGISLATION WAS TO EXTEND THE SCOPE OF THE TERM 'BUYER', IT WOULD EITHER HAVE PROVIDED FOR 'INCLUSIVE' DEFINITION OR WOULD NOT HAVE PROVIDED RESTRICTIVE DEFINITION. WHEN THE INTENTION OF THE LEGISLATION IS CRYSTAL CLEAR AS TO COVER CERTAIN DEFINITE TYPES AND NOT THE OTHERS, IT USES 'MEANS'. IF THE ITA NO .328 AND 357 / RJT/201 5 A.Y S . 2010 - 11 PAGE 5 OF 9 DEFINITION USES THE WORD 'MEANS' AND IT FURTHER RESTRICTS BY PUTTING THE WORDS 'BY WAY OF'; IT MEANS THAT IT IS WITH A PURPOSE OF RESTRICTION. 2.4 LEGISLATIVE HISTORY OF SEC.206C IS ENCLOSED AT PAGE NO. 6 OF THIS PAPER BOOK FOR READY REFERENCE. BECAUS E THE LEGISLATION INTENT TO COVER ONLY CERTAIN TYPES OF BUYERS AND THEREBY TO EXCLUDE OTHER TYPES OF BUYERS, HENCE THIS DEFINITION WAS INSERTED THRU THE EXPLANATION. ACCORDING TO THE LEGISLATIVE HISTORY, THE INTENTION WAS TO COVER LARGE NUMBER OF BENAMI PE RSONS WHO WERE OBTAINING THE GOODS THRU GOVERNMENT OR INDUSTRIAL CONTRACTS THRU AUCTION, TENDER AND OTHER MODE AND THEN EVADING THE TAXES. AMENDMENT MADE BY THE LEGISLATURE THROUGH THE FINANCE ACT, 2012 IN SEC. 206C SUPPORTS THE ABOVE CONTENTION. WHEN THE LEGISLATURE LEVIED TCS ON JEWELLERY AND BULLION SALE BY INSERTING SUB - SECTION (1D), IT FELT NEED TO WIDEN THE DEFINITION OF THE BUYER ALSO AND HENCE EXPLANATION (AA)(II) WAS INTRODUCED TO COVER A BUYER WHO OBTAINS JEWELLERY OR BULLION 'IN ANY SALE' . THE W ORDS VIZ. 'BY WAY OF' AND ' MODE ' WHICH WERE USED IN EXPLANATION (AA)(I) WERE REMOVED IN' THIS NEWLY INSERTED EXPLANATION (AA)(II). IN CASE OF A BUYER IS PURCHASING JEWELLERY OR BULLION, HE IS COVERED BY TCS PROVISIONS IRRESPECTIVE OF 'WAY' OR 'MODE' OF SAL E. AT SEC. 206C, FOR SCRAP, THE LEGISLATION HAS RESTRICTED THE SCOPE AND COVERAGE TO ONLY SUCH BUYERS WHO HAS OBTAINED THE GOODS BY CERTAIN MODES I.E. AUCTION, TENDER OR ANY OTHER MODE . HENCE MEANING OF 'MODE' IS OF PARAMOUNT IMPORTANCE HERE. 2.5 D ICTIONARY MEANING OF 'MODE' (HTTP://WWW.THEFREEDICTIONARY.COM) 1. A. A MANNER, WAY, OR METHOD OF DOING OR ACTING: MODERN MODES OF TRAVEL. SEE SYNONYMS AT METHOD. B. A PARTICULAR FORM, VARIETY, OR MANNER: A MODE OF EXPRESSION. C. A GIVEN CONDITION OF FUNCTIONING; A STATUS: THE SPACECRAFT WAS IN ITS RECOVERY MODE. 2. LOGIC A. SEE MODALITY. B. THE ARRANGEMENT OR ORDER OF THE PROPOSITIONS IN A SYLLOGISM ACCORDING TO BOTH QUALITY AND QUANTITY. 3. MUSIC A. ANY OF CERTAIN FIXED ARRANGEMENTS OF THE DIATONIC TONES OF AN OCTAVE, AS THE MAJOR AND MINOR SCALES OF WESTERN MUSIC. B. A PATTERNED ARRANGEMENT, AS THE ONE CHARACTERISTIC OF THE MUSIC OF CLASSICAL GREECE OR THE MEDIEVAL CHRISTIAN CHURCH. 4. PHILOSOPHY ITA NO .328 AND 357 / RJT/201 5 A.Y S . 2010 - 11 PAGE 6 OF 9 THE PARTICULAR APPEARANCE, FORM, OR MANNER IN WHI CH AN UNDERLYING SUBSTANCE, OR A PERMANENT ASPECT OR ATTRIBUTE OF IT, IS MANIFESTED. 5. MATHEMATICS THE NUMBER OR RANGE OF NUMBERS IN A SET THAT OCCURS THE MOST FREQUENTLY. 6. PHYSICS ANY OF NUMEROUS PATTERNS OF WAVE MOTION OR VIBRATION. FROM THE ABOVE DEFINITION, IT IS CLEAR THAT THE LEGISLATION INTEND TO COVER ONLY SUCH BUYERS WHO HAVE OBTAINED GOODS BY WAY OF AUCTION, TENDER OR ANY OTHER METHODICAL WAY OR MANNER OR THRU A PARTICULAR FORM, CONDITIONS OR FUNCTIONING. THE BUYER WHO HAS NOT PURCHASED THRU ANY OTHER MODE IS NOT COVERED OR IS INTENDED TO BE EXCLUDED. 'ANY OTHER MODE' OR METHODICAL WAY OR MANNER OR THRU A PARTICULAR FORM, CONDITIONS OR FUNCTIONING IS VISUALISED AS UNDER: - I. PERMITS II. LICENSES III. TRADE FARES IV. LEASE HOLD RIGHTS V. INDUSTRIAL BULK SALES THRU OPEN ADVERTISEMENTS 2.6 WHILE INTERPRETING 'ANY OTHER MODE' IN DEFINITION OF 'BUYER', AT PARA 41 OF THE SPECIAL BENCH DECISION OF BHARTI AUTO PRODUCTS (PAGE NOS.7 TO 34 OF THIS PAPER BOOK), HON' ITAT STATED THAT: - THE WOR DS DEFINING A BUYER AS 'A PERSON WHO OBTAINS IN ANY SALE, BY WAY OF AUCTION, TENDER OR ANY OTHER MODE' IN SEC. 206C - EXPLANATION (AA)(I) ARE PLAIN AND SIMPLE IN THEIR MEANING AND CONTENT. THE USE OF WORD *OR* IN THE AFORESAID EXPRESSION SHOWS THAT ALL THE THREE PHRASES ARE INTENDED TO CARRY INDEPENDENT MEANING WITHOUT BEING CONTROLLED BY EACH OTHER. THE WORDS 'ANY OTHER MODE' ARE WORDS OF WIDE AMPLITUDE AND THEREFORE COVER ALL POSSIBLE MODES OF SALES IN ADDITION TO SPECIFIC MODES OF SALES BY WAY OF AUCTION OR TENDER. HENCE THEY CANNOT BE CONSTRUED EJUSDEM GENERIS OR AS REFERRING TO SIMILAR SALES AS THOSE BY WAY OF AUCTION OR TENDER. NO DECIDED CASE OF ANY COURT HOLDING THAT THE WORDS 'OR ANY OTHER MODE' HAVE EVER BEEN USED IN THE SENSE CONTENDED ON BEHALF OF THE ASSESSEE HAS BEEN BROUGHT TO OUR NOTICE. 2.7 YOUR APPELLANT HEREBY BRINGS TO THE NOTICE OF YOUR HONOUR, THE HON'BLE KARNATAKA HC JUDGMENT IN MYSORE SALES INTERNATIONAL LTD. (KAR) 286 ITR 136 (2006) WHERE THE HC HAD DEALT WITH 'ANY OTHER MODE' I N THE DEFINITION OF THE 'BUYER' AT LENGTH. THE FINAL VERDICT WAS AGAINST THE ASSESSEE BECAUSE THE RESPONDENT (THE DEPARTMENT) COULD PROVE THAT THE APPELLANT HAD OBTAINED THE LIQUOR AS PER RULE 3 MENTIONED ABOVE AND HENCE HE IS COVERED BY DEFINITION OF THE 'BUYER' AS PROVIDED IN SEC. 206C. HOWEVER, THE RATIO OF THE DECISION OF THE HC RELATED TO ANALYSIS OF THE LEGISLATIVE HISTORY AND THE WORD 'ANY OTHER MODE' IN ITA NO .328 AND 357 / RJT/201 5 A.Y S . 2010 - 11 PAGE 7 OF 9 DEFINITION OF THE 'BUYER' SUPPORTS CONTENTION OF YOUR APPELLANT IN HIS FAVOUR. COPY OF THE DECISI ON IS ENCLOSED AT PAGE NOS. 35 TO 58 OF THIS PAPER BOOK. THE WORDS BY WAY OF AUCTION, TENDER OR ANY OTHER MODE WERE BORROWED FROM THE STATE RULES. RULE 3 OF THE KARNATAKA EXCISE (LEASE OF RIGHT TO RETAIL VEND OF LIQUORS) RULES, 1969 PROVIDES THAT THE RIGH T OF RETAIL VEN DING OF LIQUORS MAY BE DISPOSED OF BY THE DEPARTMENT: (I) BY TENDERS; (II) BY AUCTION; (III) BY TENDER - CUM - AUCTION OR (IV) IN ANY OTHER MANNER. RELEVANT PORTION OF THE KARNATAKA HIGH COURT VERDICT IS REPRODUCED AS UNDER: - QUOTE THE LEGAL CONTENTION ON BEHALF OF THE APPELLANT COMPANIES IS THAT THEY HAVE NOT OBTAINED THE GOODS OF ARRACK BY AUCTION BUT ONLY BY WAY OF PERMITS THEY HAD PURCHASED THE SAME FROM THE COMPANIES. THEREFORE, THEY HAVE URGED THAT SUB - SECTION (1) OF SECTION 206C OF THE ACT IS NOT APPLICABLE TO THE CONTRACTORS/BUYERS AS THEY WERE EXEMPTED UNDER SUB - CLAUSES ( I ) TO ( III ) UNDER THE EXPLANATION OF 'BUYER'. IT IS NOT THE CASE OF BOTH THE APPELLANTS BEFORE THIS COURT THAT THE CONTRACTORS DID NOT PURCHASE THE GOODS OF ARRACK F ROM THEM PURSUANT TO THE LEASEHOLD RIGHTS ACQUIRED BY THEM PARTICIPATING IN THE PUBLIC AUCTION, IF, THAT WERE TO BE THE CASE, THEY COULD HAVE PRODUCED THE ORDERS WHICH WERE IN THEIR POSSESSION TO SHOW THAT THE CONTRACTORS/BUYERS HAVE PURCHASED THE ARRACK B Y NOT FOLLOWING THE PROCEDURE CONTEMPLATED UNDER RULE 3 OF THE RULES 1969. UNQUOTE IT IS CLEARLY ESTABLISHED IN THE CASE THAT THE LEGISLATIVE INTENT IS CLEARLY TO COVER SUCH BUYERS WHO OBTAINS THE GOODS BY WAY OF CERTAIN MODES I.E. AUCTION, TENDER OR ANY OTHER MODE. 'ANY OTHER MODE' IS VISUALISED AS UNDER: - I. PERMITS II. LICENSES III. TRADE FARES IV. LEASE HOLD RIGHTS V. INDUSTRIAL BULK SALES THRU OPEN ADVERTISEMENTS YOUR APPELLANT HAS NOT OBTAINED THE GOODS IN ANY SUCH MODES I.E. AUCTION, TEN DER OR ANY OTHER MODE . HENCE HE IS NOT COVERED BY DEFINITION OF THE BUYER AND ACCORDINGLY SEC. 206C IS NOT APPLICABLE. GROUND NO.3 THE LEARNED CIT(A) ERRED IN LAW AS WELL AS ON FACTS IN DIRECTING THE AO TO CHARGE INTEREST AS APPLICABLE FROM T LIE DUE DATE OF DEDUCTION OF TCS TO THE ITA NO .328 AND 357 / RJT/201 5 A.Y S . 2010 - 11 PAGE 8 OF 9 DATE OF FILING RETURN OF INCOME BY THE BUYERS AS PER PROVISO TO SECTION 206C(7) OF THE ACT. 1. THE PROVISO TO SECTION 206C(7) INSERTED BY THE FINANCE ACT, 2012 W.E.F. 1 ST JULY, 2012 PROVIDES TO LEVY INTEREST FROM THE DATE ON W HICH SUCH TAX WAS COLLECTIBLE TO THE DATE OF FURNISHING OF RETURN OF INCOME BY SUCH BUYER OR LICENSEE OR LESSEE. THE RELEVANT PORTION OF THE PROVISO TO SECTION 206C(7) IS AS UNDER. - 'PROVIDED THAT IN CASE ANY PERSON, OTHER THAN A PERSON REFERRED TO IN SU B - SECTION (ID), RESPONSIBLE FOR COLLECTING TAX IN ACCORDANCE WITH THE PROVISION OF THIS SECTION, FAILS TO COLLECT THE WHOLE OR ANY PART OF THE TAX ON THE AMOUNT RECEIVED FROM A BUYER OR LICENSEE OR LESSEE OR ON THE AMOUNT DEBITED TO THE ACCOUNT OF THE BUYE R OR LICENSEE OR LESSEE BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO OF SUB SECTION (6A), THE INTEREST SHALL BE PAYABLE FROM THE DATE ON WHICH SUCH TAX WAS COLLECTIBLE TO THE DATE OF FURNISHING OF RETURN OF INCOME BY SUCH BUYER OR LICENSEE OR LESSEE.' 2. YOUR APPELLANT SUBMITS THAT THE PROVISO TO SECTION 206C(7) IS MADE EFFECTIVE FROM 1 ST JULY, 2012 AND IT WILL OPERATE PROSPECTIVELY. A NEW LEVY OF INTEREST IS CLEARLY A SUBSTANTIVE PROVISION. IT WAS DECIDED BY THE HON'BLE SUPREME C OURT IN THE CASE OF STAR INDIA (P) LTD. (2006) 280 ITR 321 (COPY OF THE DECISION IS ENCLOSED AT PAGE NO.59 TO 62 OF THIS PAPER BOOK) THAT THE LIABILITY TO PAY INTEREST WOULD ONLY ARISE ON DEFAULT AND IS REALLY IN THE NATURE OF QUASI - PUNISHMENT. SUCH LIABIL ITY ALTHOUGH CREATED RETROSPECTIVELY COULD NOT ENTAIL THE PUNISHMENT OF PAYMENT OF INTEREST WITH RETROSPECTIVE EFFECT. 3. RELIANCE IS ALSO PLACED ON THE DECISION OF THE HON'BLE SPECIAL BENCH OF THE DELHI TRIBUNAL IN THE CASE OF EKTA PROMOTERS PVT. LTD. (2 008) 117 TTJ DELHI 289 (COPY OF THE DECISION IS ENCLOSED AT PAGE NO.63 TO 85 OF THIS PAPER BOOK) WHEREIN IT WAS HELD THAT THE LEVY ON INTEREST UNDER SECTION 234D OF THE ACT WOULD APPLY PROSPECTIVELY FROM A . Y . 2004 - 05 ONWARDS AND NOT FOR THE EARLIER YEARS. 4. YOUR APPELLANT SUBMITTED BEFORE THE AO VIDE LETTER DATED 07 TH MARCH, 2014, A LIST OF TRADERS ALONG WITH FORM NO.27BA OBTAINED TO WHOM AGGREGATE SALES OF RS.11,60,19,203/ - WERE MADE. LIST OF SUCH TRADERS (PAGE NO.87 OF THIS PAPER BOOK) AND FORM NO. 27B A IS ENCLOSED AT PAGE NO.92 TO 104 . THE LEARNED CIT(A)VIDE HIS ORDER DIRECTED AO TO CHARGE, INTEREST AS PER PROVISO TO SECTION 206C(7) ON SALES MADE TO SUCH TRADERS FROM WHOM FORM NO. 27BA OBTAINED. 5. YOUR APPELLANT SUBMIT THAT HIS CASE PERTAIN TO A . Y . 2010 - 11, THEREFORE, INTEREST PAYABLE AS PER PROVISO TO 206C(7) OF THE ACT, AS INSERTED W.E.F. 1 ST JULY, 2012, IS NOT APPLICABLE. 4 . LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITS THAT HE HAS NO OBJECTION TO THE MATTER BEING REMITTED TO FILE OF THE ASSESSING OFFICER FOR LIMITED VERIFICATION AS ABOVE. ITA NO .328 AND 357 / RJT/201 5 A.Y S . 2010 - 11 PAGE 9 OF 9 5 . IN THE LIGHT OF THE ABOVE DISCUSSIONS, AND WITH THE CONSENT OF THE PARTIES, WE HEREBY REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR THE LIMITED PURPOSES OF AFFORDING ASSESSEE AN OPPORTUNITY TO FILE REQUISITE DECLARATION FORMS, AND DECIDING THE MATTER AFRESH, IN THE LIGHT OF THE SAME AND THE LAW LAID DOWN BY S PECIAL B ENCH IN THE CASE OF BHARTI AUTO PRODUCTS (SUPRA). ORDERED ACCORDINGLY. 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. 7 . IN VIEW OF THE FACT THAT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES, THE ISSUES RAISED IN THE DEPARTMENTAL APPEAL, ARE RENDERED ACADEMIC. IT IS, ACCORDINGLY, DISMISSED AS INFRUCTUOUS. 8 . TO SUM UP, WHILE TH E APPEAL OF THE ASSESSEE IS ALLOWED FOR STATIS TICAL PURPOSES, THE APPEAL FILED BY THE ASSESSING OFFICER IS DISMISSED AS INFRUCTUOUS. P RONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF JANUARY, 2016. SD/ - SD/ - KUL BHARAT PRAMOD KUMAR (JUDICIAL MEMBE R) (ACCOUNTANT MEMBER) AHMEDABAD , THE 19 TH DAY OF JANUARY , 201 6 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSI STANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT