- (1.) This order shall dispose of ITA Nos. 144 to 147, 274, 275, 300 and 301 of 2013 as according to the learned counsel for the parties, the facts involved in all the appeals for the assessment years 2007-08, 2008-09, 2009-10 and 2010-11 are similar and can be disposed of by one common order. However, the facts are being extracted from ITA No. 144 of 2013. ITA No. 144 of 2013 has been preferred by the appellant under Section 260A of the Income Tax Act, 1961 (in short, "the Act") against the consolidated order dated 19.11.2012, Annexure A.3 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (in short, "the Tribunal') in ITA No. 311(ASR)/2012, for the assessment year 2007-08. It was admitted on 24.2.2014 to consider following substantial questions of law:-- "i) Whether on the facts and circumstances of the case, the Hon'ble ITAT is correct in law in holding that the sale of bagasse is not covered under the definition of scrap as per explanation (b) to Section 206C of the Income Tax Act, 1961? ii) Whether on the facts and circumstances of the case, the Hon'ble ITAT is right in law in holding that the assessee is not liable to collect tax at source under Section 206C(1) of the Income Tax Act, 1961 in absence of declaration/certificate in Form No. 27C in view of sub-section (1A) to Section 206C of the Act?"
(2.) A few facts relevant for the decision of the controversy involved as narrated in ITA No. 144 of 2013 may be noticed. The assessee is a cooperative society and is engaged in manufacturing of sugar. On 29.12.2010, an inspection under section 133A of the Act was carried out at the respondent Sugar mill. It was noticed by the Inspecting officer that the respondent assessee was selling molasses and bagasse generated during the manufacturing process to different persons without collecting tax at source under section 206C of the Act. The assessee was given an opportunity to explain how the provisions of Tax Collection at Source (TCS) were not applicable. The assessee submitted that the provisions of TCS under section 206C of the Act were not applicable on the sale of those two items i.e. Molasses and bagasses since molasses generated during the manufacturing process could not be termed as scrap for the purpose of this section. It was claimed that this was the byproduct of the process of manufacture. Molasses was different from scrap as it was a distinct product produced during the course of manufacture of sugar. In respect of bagasse, it was explained that the same was also used as bio fuel and renewable resource in the manufacture of pulp and paper products and building material and was not scrap. It was held that the material sold by the respondent assessee as waste was not usable as such but required a number of processes before being able to put to use. Therefore, the assessee was liable to collect tax at source on the sale of molasses. In respect of bagasse, it was held that the same was being sold to seller who used it for the manufacture of pulp, paper and building material. Thus, the assessee was in default and liable to pay the tax involved to the credit of Central Government account. The Assessing officer calculated the amount of default and also held the assessee to be liable to pay interest till the date of the passing of the order vide order dated 23.3.2011, Annexure A.1. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 28.5.2012, Annexure A.2, the appeal was partly allowed. The CIT(A) upheld the action of the Assessing officer and also in charging interest under section 206C(6) of the Act in respect of sale of molasses. However, in respect of sale of bagasse by the assessee, the CIT(A) held that the assessee was not liable to collect tax at source under section 206C(1) of the Act and consequent demand of interest was also set aside. Not satisfied with the order of CIT(A), the assessee as well as the revenue filed separate appeals before the Tribunal. Vide order dated 19.11.2012, Annexure A.3, the appeals of the revenue were dismissed whereas appeals filed by the assessee were allowed. Hence the instant appeals by the revenue.
(3.) We have heard learned counsel for the parties and perused the record.;