INCOME TAX ACT, 1961

Section 206C(6A)/(7)

Tax collection at source - Under section 206C - Sale of scrap material purchased from Railways in auction -

Assessee purchased scrap material from Railways in auction, which was subjected to TCS and the said material was again sold by the assessee to various traders as well as consumers without collecting the tax at source. Therefore, AO initiated proceedings for holding the assessee in default under section 206C(6A)/(7). Assessee contended that the said material sold by him, did not fall in the definition of scrap as provided in clause (b) of section 206C. He further, contended that some of the sale considered by the AO as scrap was actually sale of new goods. Held: Once the assessee accepted the goods purchased from Railway as scrap and allowed the TCS then the resale of the same goods by the assessee would not part take a different character. Therefore, in view of the undisputed fact that what was purchased by the assessee was scarp subjected to TCS then the resale of the same material was also be treated as scrap and there was no scope of re-classification of those goods at the time of sale. Further, as regards the contention of the assessee that some of the sale considered by the AO as scrap was actually sale of new goods, it was found that the AO considered the sale on the basis of the spot verification. However, the assessee placed certain sale bills before the Tribunal in support of his contention; therefore, the matter was remanded for verification of the same by considering the evidence filed by the assessee and then decide the same.

REFERRED :

FAVOUR : Against the assessee/Matter remanded

A.Y. :

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