Case Law Details
Balaji Build Tech Vs ITO (TDS) (ITAT Cuttack)
At the outset, it must be understood that the AO in his assessment has categorically held that the assessee is a firm dealing in trading of Iron and Steel goods. The assessee is mainly purchasing the scrap sold by RSP Rourkela. The RSP Rourkela is a steel manufacturing plant. Here the argument of the ld. AR gets strength from the fact that if what has been sold by RSP is actually plain and simple scrap then what stopped RSP from recycling the said scrap in its manufacturing process. Thus, the claim of the ld. AR that what has been sold by RSP under the terms scrap is the second quality products which did not meet quality control requirement of RSP also is found to be on a sound footing. The argument of the ld. Sr. DR that once what is sold as scrap and what is purchased is scrap cannot take a different character would not hold water insofar as what is scrap for one person could be a useful product for another. In case of the assessee itself if we take the presumption that what the assessee has purchased from RSP is only scrap then he would be selling the same to some other steel manufacturing plant. However, the sales are retail sales. This itself shows that what has been sold by the assessee is not scrap but usable products. This being so, we are of the view that what has been sold by the assessee is not scrap and consequently, the provisions of Section 206(C) of the act would not apply to the facts of the assessee’s case. Accordingly, the TCS liability determined by the AO and as confirmed by the CIT(A) in both the appeals of the assessee for both the years under consideration stands cancelled.
FULL TEXT OF THE ORDER OF ITAT CUTTACK
These two appeals have been filed by the assessee against the separate orders of the CIT(A), National Faceless Appeal Centre (NFAC), Delhi, both dated 25.03.2022 for the assessment years 2016-2017 & 2017-2018.
2. Ld. AR drew our attention to the assessment order and submitted that the assessee is a partnership firm dealing in trading of iron and steel goods. It was the submission that the assessee’s purchases are mainly from Rourkela Steel Plant(in short ‘RSP’), Rourkela. It was submitted that RSP, Rourkela is manufacturing of Iron and Steel. Such portion of their products which could not meet their quality control standard, are sold by RSP Rourkela in the form of scrap to the assessee and TCS is collected on such sale by RSP, Rourkela. It was submitted that what is sold by RSP as scrap, are basically slightly defective products manufactured by RSP Rourkela and the assessee sells what he has purchased from RSP Rourkela in the open market. It was the submission that what is sold by the assessee is not scrap, insofar as if it was actually scrap that the assessee has purchased from RSP Rourkela, then nothing stopped RSP Rourkela from recycling the said scrap for manufacturing of its iron and steel products. It was submitted that the assessee buys second quality product from RSP Rourkela as scrap and sells it in the open market. It was the submission that the AO was of the view that what has been purchased by the assessee is scrap on which TCS has been paid, and, therefore, on the further sale by the assessee what has been sold by the assessee would only be scrap and the assessee was liable to collect TCS u/s.206(C) of the Act. As the assessee had not collected TCS on the sale of Iron and Steel Products dealt with by the assessee, ,the AO had levied a demand of TCS on the assessee. It was the submission that the issue was squarely covered by the decision of the coordinate bench of the Tribunal in the case of M/s Gopal and Company. passed in ITA Nos.84&85/CTK/2021, order dated 28.10.2021, wherein the coordinate bench of this Tribunal had held following the decision of the Lucknow Bench of the Tribunal in the case of M/s Wire One, ITA No.220/Lkw/2020, order dated 16.12.2020 that TCS was not required to be collected on the scrap sold in the course of trading activity. It was the submission that, at the outset, what has been sold by the assessee is not scrap but the second quality Iron & Steel products purchased from RSP Rourkela. It was the submission that the order of the ld. CIT(A) and that of the ld. AO is required to be cancelled.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
