Income Tax Appellate Tribunal - Panji
Ito (Tds-2), Jaipur vs Chandmal Sancheti, Jaipur on 2 August, 2017
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IN THE INCOME TAX APPELLATE TRIBUNAL,
JAIPUR BENCHES (SMC), JAIPUR
Jh Hkkxpan] ys[kk lnL;] ds le{k
BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER
vk;dj vihy la-@ITA No. 25 & 26/JP/2017
fu/kZkj.k o"kZ@Assessment Year : 2011-12 & 2012-13
Income Tax Officer cuke Chandmal Sancheti,
(TDS-2), Vs. Porp.- M/s Hindustan Sales
Jaipur. Corporation, 144-B, Saket
Colony, Vijay Bari, Path No. 7,
Sikar Road, Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/TAN No.: JPRC 02319 C
vihykFkhZ@Appellant izR;FkhZ@Respondent
jktLo dh vksj ls@ Revenue by : Shri S.L. Chandel (Addl. CIT)
fu/kZkfjrh dh vksj ls@ Assessee by : Shri P.C. Parwal (CA)
lquokbZ dh rkjh[k@ Date of Hearing : 31/07/2017
mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 02/08/2017
vkns'k@ ORDER
PER: BHAGCHAND, A.M. Both the appeals filed by the revenue emanates from the separate orders of the ld. CIT(A)-5, Jaipur dated 28/10/2016 for the A.Ys. 2011- 12 & 2012-13, wherein the revenue has taken common effective grounds of appeals in both the appeals, which are as under:
"i) On the facts and in the circumstances of the case, whether the ld. CIT(A) is justified in considering the assessee's claim in respect of declaration in Form 27C 2 ITA 25 & 26/JP/2017_ ITO (TDS-2) Vs Chandmal Sancheti which was required to be received at the time of purchase of goods by buyer and copy of declaration should be deposited by responsible person with competent authority on the specified date as required by Rule 37C and the assessee failed to comply with such legal requirement.
ii) On the facts and in the circumstances of the case, the ld.
CIT(A) has erred in law and fact by giving specific direction on account of demand raised U/s 206C(7) for charging interest violates the provision of Section 206C(7) of the Act."
2. Both the appeals of the revenue are being hearing together, therefore, for the sake of convenience and brevity, a common order is being passed.
3. The ld. CIT(A) has restored back the issue to the file of the Assessing Officer by following the order of the Hon'ble ITAT by holding as under:-
"3.3 I have considered the facts of the case, the order u/s 206C(6A)/ 206C(7) and the submissions of the appellant. The first contention of the assessee as raised in Ground no. 1(a) is regarding ship-breaking scrap being sold by the assessee is not covered under the definition of scrap. This ground is covered against the assessee by order of ITAT, Jaipur Bench in his own case vide order dated 16-08-2016 in ITA Nos. 344 & 345/JP/2015 for A.Ys2008-09 and 2009-10. The relevant portion of the said order is as under:
"Further the definition of scrap if read in conjunction with sub- section (1A) of Section 206C, it clearly suggests that the scrap is only indicative of nature of goods and it is not indicative of the person from whom the TCS is required to be collected. The 3 ITA 25 & 26/JP/2017_ ITO (TDS-2) Vs Chandmal Sancheti definition of scrap in view of the Bench, does not suggest that the scrap should be generated by the seller himself. The only condition of the scrap is that the scrap should be waste and scrap from the manufacturing or mechanical working of material, which is definitely not usable as such on account of breakage, cutting up, wear and other reasons. In our opinion, the provisions of Section 206C of the Act are applicable to the present case as the assessee is a trader and dealing in the scrap generated from the mechanical working of the material (breaking of the ship). Further it is not necessary that such mechanical working (breaking of the ship) should be carried out by the assessee himself. The assessee is, therefore, liable to deduct tax at source U/s 206C of the Act on the sale of scrap. In fact, the admission of the assessee is the best evidence to admit the liability. The assessee himself has admitted that the assessee is dealing in the scrap generated from the breaking of the ship and had purchased the scarp. The contention of the Id AR that since the iron scrap like steel, ingots, iron etc. is being used by the industries without any change, is not correct as the nature of goods shall remain same, therefore, it comes under the definition of the scrap. In our view, the material sold by the assessee cannot be used as such without any modification by the buyer of the said scrap. As the said material/goods come from the breaking of the ship, these goods were sold to the manufacturer/rerolling mills, as scrap therefore, the goods (scrap) sold by the assessee were not usable as such and therefore, the assessee was required to deduct TCS from the buyer, in view thereof, the ground No. 1 of the assessee's appeal is decided against the assessee."
3.4 Respectfully following the order of ITAT, Jaipur bench in the case of the assessee, it is held that ship-breaking scrap sold by the assessee is covered under the definition of scrap as per Explanation to sec.206C. This ground of appeal is thus dismissed.
3.5 The above findings of ITAT, Jaipur bench also covers the contention of the assessee as raised in ground no. 1(c) that apart from the ship-breaking scrap, the assessee has also sold 4 ITA 25 & 26/JP/2017_ ITO (TDS-2) Vs Chandmal Sancheti various other material such as MS Bar, Channel, M.S. Ingot, Pig Iron, Silicon manganese, old and used plates etc. which are usable as such and hence do not fall under the definition of scrap. The assessee has claimed that sale of plates to certain parties accordingly would not fall under 'scrap' and hence accordingly the relatable interest of Rs. 43,783 charged u/s 206C(7) should be deleted. In this regard, the ITAT has given its finding( supra) that the material sold by the assessee cannot be used as such without any modification by the buyer of the said scrap and would hence fall under the definition of 'scrap' thereby attracting TCS. Since 'Plates' are part of ship-breaking scrap purchased and sold by the assessee, these would be covered under 'scrap'. This contention of the assessee is therefore not acceptable. Ground 1(c) is accordingly dismissed.
4. Ground 1(b) is against demand u/s 206C(6A)/206C(7) raised by the AO due to non-furnishing of Form no. 27C within prescribed time-limits. The assessee has contended that the ship- breaking scrap is sold to manufacturers who have given declaration in Form No. 27C, even though in the course of TDS proceedings, and hence there should be liability U/s 206C(6A)/206C(7). In support, the assessee has cited decision of ITAT, Jaipur bench (supra) in his own case, wherein it has been held that even where Form no. 27C is filed belatedly, the benefit of such declaration should not be denied to the assessee. The relevant extract of the said decision is quoted below:
"The provision of sub section (IA) of section 206C, in our view, do not provide the consequences of the delayed filing of the declaration. Though, it provides that it is to be filed on or before the 7th day of the next following month in which declaration is furnished to him. Therefore, though there is delay in issuing the
5 ITA 25 & 26/JP/2017_ ITO (TDS-2) Vs Chandmal Sancheti declaration by the buyer, the assessee cannot be penalized or deprived from the benefit of the declaration given by the buyer. The only duty cast upon the seller to submit declaration in the following month in which the declaration received. No time limit has been provided by the statute on the buyer to submit the declaration in Form 27. In view thereof the ground is required to be allowed. In the light of above, we deem it appropriate to remand the matter back to the file of the Assessing Officer with direction to verify whether the declaration has been filed by the assessee in the requisite form and what will the effect of filing of this declaration on the calculation of the TCS u/s. 206 of the Act. It is, however, again clarified that the delay in filing the declaration shall not be a ground to the Assessing Officer to deny the benefit of the declaration to the assessee. In view thereof, the Ground No. 2 of the appeal is allowed for statistical purposes only"
4.1 Respectfully following the directions of ITAT in the assessee's own case, the AO is directed to verify whether declarations in Form 27C as mandated by sec. 206C(1A), have been filed in the requisite form and to give credit thereof if so filed and thereby recompute the liability u/s 206C(6A) and 206C(7).
5. Ground no. 1(d) is against considering the assessee in default in view of certificates filed in Form 27BA as per Proviso to sec. 206C(6A) stating that the buyer has filed Return of income taking into consideration the amount of purchase price of goods for computing his income and has paid taxes thereon. It is contended by the assessee that the AO has accepted such certificates and has not created liability u/s 206C(6A) in respect of all parties wherein the said certificates were given, except in one case viz. Sharma Steel Rolling Mills. The AO is directed to verify the said case and to delete the liability u/s 206C(6A) in respect of this party if certificate in Form no. 27BA has been 6 ITA 25 & 26/JP/2017_ ITO (TDS-2) Vs Chandmal Sancheti furnished in accordance with Proviso to sec. 206C(6A). Subject to the verification, this ground is treated as partly allowed.
6. Ground no. 1(e) is against interest demand raised u/s 206C(7) in respect of non-deduction of TCS of those parties which have paid due taxes by considering the amount of purchase in computing their income.
6.1 The AO has charged interest u/s 206C(7) in respect of those cases in which Form no. 27BA was furnished in accordance with Proviso to sec. 206C(6A). This interest has been charged from the date on which such tax was collectible to the date of furnishing of Return of income by such buyer in accordance with Proviso to sec. 206C(7). The appellant has contended that most of the buyers of the scrap have paid advance tax/ TDS which is more than the tax due as per their Return of income, thus in such cases there is no loss to Revenue on account of non- deduction of TCS. It is thus contended that no interest u/s 206C(7) should be charged in such cases. The interest charged in such cases is quantified at Rs. 87,256 by the appellant.
6.2 I have considered the submissions of the appellant. In the order dated 16-08-2016 in appellant's own case(supra), ITAT, Jaipur Bench has held as follows:
"The Hon'ble ITAT in the assessee's own case for A.Y 2008-09 & 2009-10 also directed the AO to levy the interest after considering the advance tax paid by holding as under:-
We have heard the rival contentions of both the parties and perused the material available on the record In our view, the assessee is duty bound to collect the TCS from the buyers in terms of Section 206C of the Act. However, the collection of TCS and deposit of the TCS is only exempted in respect of the cases
7 ITA 25 & 26/JP/2017_ ITO (TDS-2) Vs Chandmal Sancheti where the declaration is being filed by the assessee in view of sub-section (I A) of Section 206C of the Act. In view thereof the revenue is only entitled to the recovery of the interest on the unpaid tax amount/deposit/short tax deposited by the buyer. If the taxes deposited by the buyer is fair and more than the tax required to be deducted by the assessee then in that eventuality, no interest is payable. However, if the tax deposited by the buyer was found to be less than the amount to be deposited by the assessee then the assessee is liable to pay the interest up to the month in which the returns were been filed by such buyers. Since the declaration is required to be submitted in terms of Rule 37 read with Form 27, therefore, if the tax is not deposited up to the date when the TCS was required to be deducted then the assessee is liable to pay the interest, for example if the TCS is required to be deducted and paid and the due date as per rule 37 was 30th July of the year 2008 and the advance tax was deposited on 01/2/2009, then the assessee is liable to pay interest for the period 01/8/2008 up to the date of deposit of the advance tax. In the light of the above observation, this issue is also remanded back to the file of the Assessing Officer with direction to (i) to verify as to the date when the TCS was due by the seller/assessee, (ii) the date on which the advance tax was paid/deposited by the buyer, (iii) in case the advance tax is deposited prior to the due date of TCS, then no interest shall be charged. However, if the advance paid after the due date then the interest shall be charged for the intermediary period The Id Assessing Officer is directed to verify all these facts in respect of both the assessment years. In view thereof this ground of the appeal is also allowed for statistical purposes only."
6.3 Respectfully following the order of ITAT, Jaipur bench in appellant's own case, the AO is directed to verify such cases where certificates as per Proviso to 206C(6A) are furnished and if in such cases the advance tax deposited by the buyer is more than the tax required to be deducted by the assessee then in that case no interest u/s 206C(7) should be charged. However, if tax deposited by the buyer is less than the amount to be 8 ITA 25 & 26/JP/2017_ ITO (TDS-2) Vs Chandmal Sancheti deposited by the assessee, then the assessee is liable to pay interest up to the month in which the Returns have been filed by the buyers. In such cases, the AO may verify the date when TCS was done by the assessee and the date on which advance tax was paid by the buyer. In case the advance tax is deposited prior to the due date of TCS, then no interest shall be charged. However, if advance tax is paid after the due date of TCS, then interest shall be charged for the intermediary period as illustrated in the order of the ITAT(supra)."
4. The ld Sr. DR has relied on the order of the Assessing Officer and submitted that the rules framed under the Act are statutory and are being and non-furnishing of the declaration within the time granted by the Rules will disentitle the assessee to have benefit of the declaration.
5. At the time of hearing, the ld AR of the assessee has submitted that in assessee's own case for the A.Y. 2008-09 and 2009-10, the Hon'ble ITAT, Jaipur Benches, Jaipur have decided the issues under consideration and allowed for statistical purposes only. Therefore, the ld. AR prayed that both these cases may also be restored back to the file of the Assessing Officer.
6. After hearing both the sides and perusing the earlier order passed by the ITAT in the assessee's own case for the A.Ys. 2008-09 and 2009- 10 (supra), I find no any contrary material whatever reported by the ld.
9 ITA 25 & 26/JP/2017_ ITO (TDS-2) Vs Chandmal Sancheti CIT(A) in his order, therefore in absence of any material against the finding of the ld. CIT(A), I have no alternate but to concur with the finding of the ld. CIT(A), accordingly, the grounds of revenue's appeals are restored back to the file of the Assessing Officer.
7. In the result, the appeals of the revenue are allowed for statistical purposes only.
Order pronounced in the open court on 02/08/2017.
Sd/-
¼Hkkxpan½ (BHAGCHAND) ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 02nd August, 2017 *Ranjan vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- The ITO, TDS-2, Jaipur.
2. izR;FkhZ@ The Respondent- Shri Chandmal Sancheti, Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 25 & 26/JP/2017) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar