Take notes as you read a judgment using our Virtual Legal Assistant and get email alerts whenever a new judgment matches your query (Query Alert Service). Try out our Premium Member services -- Free for one month.\n\nIncome Tax Appellate Tribunal - Lucknow\nM/S. Lala Bharat Lal And Sons, Lucknow vs Income Tax Officer (Tds), Lucknow on 19 February, 2020\n                      FIT FOR PUBLICATION\n\n\n          IN THE INCOME TAX APPELLATE TRIBUNAL\n               LUCKNOW BENCH"A", LUCKNOW\n\n           BEFORE SHRI. A. D. JAIN, VICE PRESIDENT\n         AND SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER\n\n               ITA No.14, 15 & 16/LKW/2019\n        Assessment Year:2014-15, 2015-16 & 2016017\n\nM/s Lala Bharat Lal & Sons       v.    ITO (TDS)-1\n242/93, Yahiya Ganj                    Lucknow\nLucknow\nTAN/PAN:AADFL1745J\n(Appellant)                            (Respondent)\n\n                S.P. No.04, 05 & 06/LKW/2019\n              [in ITA No.14, 15 & 16/LKW/2019]\n        Assessment Year:2014-15, 2015-16 & 2016017\n\nM/s Lala Bharat Lal & Sons       v.    ITO (TDS)-1\n242/93, Yahiya Ganj                    Lucknow\nLucknow\nTAN/PAN:AADFL1745J\n(Applicant)                            (Respondent)\n\n\n  Assessee by:               Shri Rakesh Garg, Advocate\n  Department by:             Shri Ajay Kumar, D.R.\n  Date of hearing:           06 02 2020\n  Date of pronouncement:     19 02 2020\n\n\n                           ORDER\n\nPER BENCH:\n\n        These are three appeals filed by the assessee against the\norders of the ld. CIT(A), all dated 31/12/2018.    Since similar\nissues are involved in these appeals, these were heard together\nand for the sake of convenience, a common and consolidated\norder is being passed. For the sake of completeness, the grounds\n            ITA No.14, 15 & 16/LKW/2019& S.P. No.04, 05 & 06/LKW/2019\n                                                                   Page 2 of 15\n\nof appeal taken by the assessee in ITA No.14/LKW/2019 are\nreproduced below:\n\n     01.   The CIT(A) has erred on facts and in law in upholding\n     the business activity of trading in ferrous and non-ferrous\n     metals carried on by the appellant firm, as an activity of\n     sale of scrap, as defined in section 206C(1) of the I.T. Act,\n     1961, thereby wrongfully treating the appellant as an\n     assessee in default for not collecting TCS @ 1 % on the\n     entire sale proceeds made by the appellant firm.\n\n     02.      Because the CIT(A) has wrongly interpreted the\n     provisions of section 206C and has erred in upholding, that\n     the business of trading in metals, carried on by the\n     appellant firm of purchase and sale of scrap, is covered by\n     the definition of scrap whereby the appellant firm was liable\n     to collect TCS @1 % on the entire sales made.\n\n     03.   Because the AO as well as the CIT(A) have erred on\n     facts and in law by ignoring the fact that some of the\n     buyers of the appellant firm are manufacturers, from whom\n     Form 27C has been received by the appellant firm, thus,\n     provisions of section 206C(1) of the Income Tax Act, 1961 is\n     not applicable on the appellant firm, hence, the appellant\n     cannot be held an assessee in default as per provisions of\n     section 206C(6) and 206C(6A) of the Income Tax Act, 1961\n     with respect to the said buyers.\n\n     04.   Because on a proper interpretation of the provisions\n     of law, it would be found that the order passed by the AO\n     and upheld by the CIT(A) is contrary to facts, bad in law the\n     same be quashed.\n              ITA No.14, 15 & 16/LKW/2019& S.P. No.04, 05 & 06/LKW/2019\n                                                                     Page 3 of 15\n2.        At the outset, the ld. Counsel for the assessee submitted\nthat the assessee is dealing in the business of trading of scrap\nand during the years under consideration, the Assessing Officer\nheld that the assessee was liable to collect TCS @ 1% of the sale\namount, from the buyers, which the assessee did not do and\ntherefore, the Assessing Officer passed an order under section\n206C(6), 206C(6A) and 206C(7) of the Income Tax Act, 1961. It\nwas submitted that before the Assessing Officer and the ld.\nCIT(A), the averment of the assessee was that the sale/trading\ndone by the assessee did not tantamount to sale of scrap as\ndefined in Explanation (b) to section 206C of the Act, as the same\nhad not been generated from manufacture or mechanical working\ndone by the assessee. It was submitted that the assessee had\nalso relied on the order of the ITAT Ahmedabad 'B' Bench in the\ncase of 'Navine Fluorine International Ltd. vs. ACIT(TDS)' in ITA\nNo.1213 and 1214/Ahd/2010, wherein, the Tribunal had held\nthat for invoking the provisions of Explanation (b) to section\n206C of the Act, it is necessary that waste and scrap sold by the\nassessee should arise from the manufacturing or mechanical\nworking of the material. The ld. Counsel for the assessee further\nrelied on the decision of the ITAT Rajkot Bench in the case of\n'Nathulal P. Lavti vs. ITO(TDS)', order dated 17/6/2011, wherein,\nthe Hon'ble Bench held that to bind the assessee with the liability\n(1) the material sold must be waste and scrap, (2) the material\nsold should generate from the manufacture or mechanical\nworking of materials, and (3) the material sold is not usable as\nsuch, because of breakage, cutting up, wear and other reasons.\nIt was submitted that to fasten an assessee with the liability for\nTCS under section 206C of the Act, all the conditions should\nhave been met with. It was submitted that in the present cases,\nit   is   absolutely   clear    that    the    assessee      was     not    into\n            ITA No.14, 15 & 16/LKW/2019& S.P. No.04, 05 & 06/LKW/2019\n                                                                   Page 4 of 15\n\nmanufacturing and the scrap sold by the assessee did not result\nfrom the manufacture or mechanical working of materials. The\nld. Counsel for the assessee submitted that both the authorities\nbelow have relied on the order of the Special Bench of the ITAT\nRajkot in the case of 'M/s Bharti Auto Products vs. CIT-II,\nRajkot', order dated 6/9/2013, wherein, the Tribunal held that\nthe provisions of section 206C of the Act are applicable to the\ndealers and traders in scrap also.            The ld. Counsel for the\nassessee, in this respect, submitted that the decision of the\nSpecial Bench of the ITAT Rajkot in the case of 'M/s Bharti Auto\nProducts vs. CIT-II, Rajkot' (supra) was considered by the Hon'ble\nGujarat High Court in the case of 'CIT (TDS) vs. M/s Priya Blue\nIndustries Pvt. Ltd.', wherein, the Revenue had specifically taken\na ground of appeal, that the Tribunal had wrongly placed reliance\nupon the case of 'Navine Fluorine International Ltd. vs.\nACIT(TDS)' (supra) despite the fact that the Special Bench of the\nTribunal in the case of 'M/s Bharti Auto Products' (supra) had\nheld that the words 'waste' and 'scrap' are two different and\ndistinct words. The ld. Counsel for the assessee submitted that\nthe Hon'ble Gujarat High Court, after reproducing the grounds of\nappeal taken by the Revenue, had dismissed the appeal of the\nRevenue and, therefore, the decision of the Special Bench of the\nTribunal in the case of 'M/s Bharti Auto Products' (supra) is not\na good law, as it has been overruled by the Hon'ble Gujarat High\nCourt in the case of 'CIT (TDS) vs. M/s Priya Blue Industries Pvt.\nLtd.' (supra). Therefore, it was prayed that the assessee was not\nliable to deduct TCS under section 206C of the Act. The ld.\nCounsel for the assessee further placed reliance on the order of\nthe ITAT Ahmedabad 'D' Bench in the case of 'Shri Azizbhai A.\nLada vs. ITO(TDS)', wherein, the Tribunal vide order dated\n10/1/2018, after considering the judgment of the Hon'ble\n             ITA No.14, 15 & 16/LKW/2019& S.P. No.04, 05 & 06/LKW/2019\n                                                                    Page 5 of 15\n\nGujarat High Court in the case of 'CIT (TDS) vs. M/s Priya Blue\nIndustries Pvt. Ltd.' (supra), allowed relief to the assessee. The\nld. Counsel for the assessee further placed reliance on the\ndecision of ITAT Ahmedabad 'SMC' Bench in the case of\n'Dhasawala Traders vs. ITO(TDS)', wherein, the Tribunal, vide\norder dated 1/9/2016, after considering the judgment of the\nHon'ble Gujarat High Court in the case of 'CIT (TDS) vs. M/s\nPriya Blue Industries Pvt. Ltd.' (supra), has again allowed relief to\nthe assessee.\n\n3.      The ld. D.R., on the other hand, has placed heavy\nreliance on the orders of the authorities below and submitted\nthat in the case of 'M/s Bharti Auto Products' (supra), the Special\nBench has clearly decided the issue in favour of the Revenue by\nholding that the provisions of section 206C of the Act are\napplicable to the suppliers and traders in scrap also.                  It was\nfurther submitted that the Hon'ble Gujarat High Court in the\ncase of 'CIT (TDS) vs. M/s Priya Blue Industries Pvt. Ltd.' (supra)\nhas not specifically dealt with the ground taken by the Revenue\nand therefore, it cannot be said that the Hon'ble Court had\noverruled the judgment of the Special Bench in the case of 'M/s\nBharti Auto Products' (supra).\n\n4.      We have heard the rival parties and have gone through\nthe material placed on record. We find that it is an undisputed\nfact that the assessee is not a manufacturer and is only a dealer\nin scrap. During the years under consideration, as noted in the\nassessment orders, the assessee had sold scrap, which included\nunburned transformer coils from various distribution companies\nof UPPCL. We find that whether a trader in scrap is liable to be\nfastened with liability to collect TCS under section 206C came up\nfor consideration of the ITAT Ahmedabad 'B' Bench in the case of\n             ITA No.14, 15 & 16/LKW/2019& S.P. No.04, 05 & 06/LKW/2019\n                                                                    Page 6 of 15\n\n'Navine Fluorine International Ltd. vs. ACIT(TDS)' [supra],\nwherein, the ITAT held that to fall under the definition of scrap as\ngiven in the Explanation to section 206C of the Act, the term\n'waste' and 'scrap' are one and which should arise from\nmanufacture and if the scrap is not coming out of manufacture,\nthen the items do not fall under the definition of scrap and thus\nnot liable to TCS. The findings of the ITAT Ahmedabad Bench, as\ncontained in paras 12 and 13, are reproduced below:\n\n     "12. The explanation to section 206 C of the IT Act provides\n     the meaning of scrap means "waste and scrap" from\n     manufacture or mechanical working of material which is\n     definitely not usable as such because of breakage, cutting\n     up, wear and other reasons. In the above definition the\n     important words used in the definition of scrap are "waste\n     and scrap" - "from manufacture" and "which is". The word\n     "waste and scrap" are one item. Thereafter, the word used is\n     "from" the manufacture or mechanical working of material. It\n     would mean that the waste and scrap being one item should\n     arise from the manufacture or mechanical working of\n     material. It is, therefore, necessary to read the words waste\n     and scrap together which are generated out of manufacturing\n     process of the assessee. The words waste and scrap should\n     have nexus with the manufacturing or mechanical working of\n     material. Thereafter, the word used is "which is" definitely\n     not usable. The word "is" as used in this definition of the\n     scrap meant for singular item i.e. "waste and scrap". The\n     word waste Navine Fluorine International Ltd. Vs ACIT, TDS\n     Cir, Surat "which is" denotes to singular item and thus the\n     singular item would be waste and scrap. The words waste\n     and scrap thus cannot be read differently as is argued by\n     the learned DR. The list of scrap sold by the assessee is\n     reproduced above which are not connected with manufacture\n     or mechanical working of material. The findings of the\n     learned CIT(A) are based on presumption only that since the\n     assessee is engaged in manufacture of fluorine and other\n     refrigerated gases, therefore, entire scrap is generated out of\n     its manufacturing activities. The findings of the learned\n            ITA No.14, 15 & 16/LKW/2019& S.P. No.04, 05 & 06/LKW/2019\n                                                                   Page 7 of 15\n\n     CIT(A) are not based on any material or evidence. The\n     assessee is admittedly engaged in manufacturing of fluorine\n     and other refrigerated gases and list of scrap items noted\n     above would indicate that same cannot be used for\n     manufacturing or mechanical working of material of fluorine\n     and other refrigeration gases. By the nature of the scrap\n     items noted above, the same cannot be used while\n     manufacturing gases or doing any mechanical working of the\n     material for the gases. The items of the scrap in the case of\n     the assessee would not form part of the definition of the\n     scrap as is provided in Explanation (b) to section 206 C of the\n     IT Act. Thus, the explanation is wrongly applied in the case\n     of the assessee.\n\n     13. Considering the facts noted above, we are of the view\n     that the authorities below have wrongly applied the meaning\n     of scrap as is provided in Explanation (b) to section 206 C of\n     the IT Act in the case of the assessee. Therefore, the\n     assessee cannot be held to be in default. The assessee is not\n     required to deduct tax u/s 206 C (6) of the IT Act on the items\n     of scrap as noted above. Resultantly, no Navine Fluorine\n     International Ltd. Vs ACIT, TDS Cir, Surat interest could be\n     charged u/s 206C (7) of the IT Act. We accordingly, set aside\n     the orders of the authorities below and allow both the\n     appeals of the assessee."\n\n5.      Further, we find that the Special Bench of the Rajkot\nBench of the Tribunal in the case of 'M/s Bharti Auto Products\nvs. CIT-II' in ITA Nos.391&392/Rjt/2011, held that irrespective of\nmanufacturing, all the traders in scrap are liable to collect TCS\nunder the provisions of section 206C of the Act.\n\n6.      We further find that the Ahmedabad Bench of ITAT in\nthe case of 'ITO(TDS) vs. Priya Blue Industries Pvt. Ltd.' in ITA\nNo.2207/Ahd/2011, vide order dated 14/5/2015, again relied on\nthe order of the Ahmedbad Bench of the ITAT in the case of\n'Navine Fluorine International Ltd. vs. ACIT(TDS)' [supra] and\nheld that the words 'waste' and 'scrap' should have nexus with\n            ITA No.14, 15 & 16/LKW/2019& S.P. No.04, 05 & 06/LKW/2019\n                                                                   Page 8 of 15\n\nmanufacturing or mechanical working of materials. For the sake\nof completeness, the findings of the Ahmedbad Bench of the ITAT\nare reproduced below:\n\n     "We find that ITAT 'B' Bench, Ahmedabad in ITA Nos. 1213\n     and 1214/Ahd/2010 dated 15.02.2011 in case of Navine\n     Fluorine International Ltd Vs. ACIT, TDS Circle Surat, for A Y\n     2009-10 & 2010-11, inter alia held that term "waste and\n     scrap" are one item. The "waste and Scrap" must be from\n     manufacture or mechanical working of material which is\n     definitely not usable as such because of breakage, cutting\n     up, ware and to other reasons. It would mean that these\n     waste and scrap being one item should arise from\n     manufacture or mechanical working of material. The words\n     waste and scrap should have nexus with manufacturing or\n     mechanical working of materials. Therefore, the word used is\n     "which is" definitely not usable. The word "is" as used in this\n     definition of the scrap meant for singular item i.e. "waste and\n     scrap". As stated above, assessee is engaged in ship\n     breaking activity and as given to understand these items/\n     products in question are finished products obtained from the\n     activity. They constitute sizable chunk of production done by\n     ship breakers. Though such products may be commercially\n     known as "scrap" they are definitely not "waste and scrap".\n     The items in question are "usable as such" and therefore\n     does not fall within the definition of scrap as given in of\n     section 206C(1). Having said so, we restore the issue to\n     Assessing Officer with direction to grant relief to assessee\n     under the provision of 206C(1) of Act, with regards to only\n     sale of scrap arising out of manufacturing activity in course\n     of ship breaking after providing due opportunity of hearing to\n     assessee."\n\n7.      The Hon'ble High Court, in 'CIT(TDS) vs. M/s Priya Blue\nIndustries Pvt. Ltd.' (supra), vide order (APB:14-22), dated\n3/11/2015, passed in ITA No.604 of 2015, upholding the above\nfindings of the Tribunal, observed as follows:\n       ITA No.14, 15 & 16/LKW/2019& S.P. No.04, 05 & 06/LKW/2019\n                                                              Page 9 of 15\n\n"5. From the facts as narrated hereinabove, it is apparent\nthat the respondent assessee had collected and paid tax at\nsource (TCS) on the seven items as enumerated in the orders\npassed by the Commissioner (Appeals) as well as the\nTribunal and had not collected tax at source on the following\nfour items\n\n1. Old and used plates\n\n2. Non-excisable (exempted) like furniture, wood, etc.\n\n3. Trading of scrap (melting)\n\n4. High seas sale.\n\n6. The Tribunal, after considering the definition of scrap\nunder clause (b) to section 206C of the Act, has noted that\nthe assessee is engaged in ship breaking activity and the\nitems in question are finished products obtained from the\nactivity and constitute sizeable chunk of production done by\nship breakers. Though such products may be commercially\nknown as "scrap" they are not "waste and scrap", as such\nitems are usable as such, and, therefore, do not fall within\nthe definition of scrap as envisaged hi the Explanation to\nsection 206C(1) of the Act.\n\n7. Section 206C of the Act bears the heading, "Profits and\ngains from the business of trading in alcoholic liquor, forest\nproduce, scrap etc." and provides that every person, being a\nseller shall, at the time of debiting of the amount payable by\nthe buyer to the account of the buyer or at the time of receipt\nof such amount from the said buyer in cash or by the issue of\na cheque or draft or by any other mode, whichever is earlier,\ncollect from the buyer of any goods of the nature specified in\ncolumn (2) of the Table below, a sum equal to the percentage\nspecified in the corresponding entry in column (3) of the said\nTable, of such amount as income-tax. The nature of goods\nspecified at serial No.(vi) is scrap, and the percentage\nprovided is 1%. The expression of scrap is defined under\nclause (b) to the Explanation to section 206 of the Act, to\nmean waste and scrap from manufacture or mechanical\nworking of materials which is definitely not usable as such\n            ITA No.14, 15 & 16/LKW/2019& S.P. No.04, 05 & 06/LKW/2019\n                                                                 Page 10 of 15\n\n     because of breakage, cutting up, wear and other reasons. On\n     a plain reading of the said expression, it is evident that any\n     material which is usable as such would not fall within the\n     ambit of the expression "scrap" as envisaged under clause (b)\n     of the Explanation to section 206C of the Act.\n\n     8. The Tribunal, in the impugned order, has recorded that the\n     items/products in question obtained from the activity of ship\n     breaking are usable as such and, therefore, do not fall within\n     the definition of scrap. However, since the assessee had not\n     collected tax at source on items other than items obtained out\n     of the manufacturing activity in the course of ship breaking,\n     the Tribunal has remitted the matter to the Assessing Officer\n     for the purpose granting relief to the assessee under the\n     provisions of section 206C (1) of the Act with regard to only\n     sale of scrap arising out of manufacturing activity in the\n     course of ship breaking after providing due opportunity of\n     hearing to the assessee. Thus, the Tribunal after recording a\n     finding of fact to the effect that the products obtained by the\n     assessee in the course of ship breaking activity are usable\n     as such, and, therefore, do not fall within the definition of\n     scrap has remitted the matter to the Assessing Officer to\n     grant relief accordingly. Essentially, therefore, the impugned\n     order of the Tribunal is based upon a finding of fact which\n     does not give rise to any question of law.\n\n     9, Insofar as the course of action adopted by the Tribunal in\n     remitting the matter to the Assessing Officer to decide in\n     relation to which of the items the assessee is entitled to relief\n     under the provisions of section 206C(1) of the Act is\n     concerned, no fault can be found in the approach adopted by\n     the Tribunal, inasmuch as, out of the four items of which tax\n     was not collected at source, the matter has merely been\n     referred to the Assessing Officer for the purpose of examining\n     as to what extent relief is required to be granted to the\n     assessee under the provisions of section 206C(1) of the Act\n     having regard to the findings of fact rendered by it."\n\n8.      Thus, the Hon'ble High Court held that the expression\n"scrap" is defined in clause (b) of the Explanation to section 206C\n               ITA No.14, 15 & 16/LKW/2019& S.P. No.04, 05 & 06/LKW/2019\n                                                                    Page 11 of 15\n\nof the Act to mean 'waste' and 'scrap' from manufacture of\nmechanical working of materials, which is definitely not useable\nas such, because of breakage, cutting up, wear and other\nreasons; and that a plain reading of the expression 'scrap' as\nenvisaged under the provisions contained in clause (b) of the\nExplanation to section 206C of the Act, shows that any material\nwhich is useable as such, would not fall within the ambit of\n"scrap". The order of the Tribunal was upheld as being one on\nfacts.\n\n9.         The Tribunal, in 'Dhasawala Traders vs. ITO' (APB:8-13),\nvide      order   dated     1/9/2016         in    ITA     No.979,980       and\n1535/Ahd/2015, following the Hon'ble Gujarat High Court\njudgment in 'CIT(TDS) vs. M/s Priya Blue Industries Pvt. Ltd.'\n(supra), held that where the assessee had not generated any\nscrap in manufacturing activity, as contemplated under the\nExplanation to section 206C of the Act, and where the assessee\nwas only a trader, having not sold scrap as such, but having sold\nproducts which were re-useable and had resulted from ship\nbreaking activity, he was not supposed to collect tax under\nsection 206C of the Act. The relevant portion of the order of the\nTribunal reads as follows:\n\n         "8. A perusal of the paragraph-6 of the above judgment\n         would indicate that certain items generated out of ship\n         breaking activity might be known commercially as "scrap"\n         but they are not waste and scrap. These items are re-\n         usable as such, and therefore, would not fall within the\n         definition of "scrap" as envisaged in the Explanation to\n         section 206C(1). The assessee has also contended that it\n         was engaged in the sale of MS pipe, iron which were\n         obtained from ship breaking industries. The assessee\n         himself has not generated any scrap in manufacturing\n         activity, as contemplated in the Explanation. He was a\n             ITA No.14, 15 & 16/LKW/2019& S.P. No.04, 05 & 06/LKW/2019\n                                                                  Page 12 of 15\n\n      trader. Therefore, the assessee has not sold scrap as such.\n      He has sold the products resulted from ship breaking\n      activity, which are reusable. Thus, the assessee was not\n      supposed to collect tax under section 206C of the Act. The\n      Id. AO has erred in raising the demand. I allow all appeals\n      and delete additions.\n\n      9. In the result, all the appeals of the assessee are allowed."\n\n10.     In 'Azizbhai A Lada vs. ITO', vide order (APB:1-7) dated\n10/1/2018, passed in ITA No.765/Ahd/2015, again, following\nthe Hon'ble Gujarat High Court decision in 'CIT(TDS) vs. M/s\nPriya Blue Industries Pvt. Ltd.' (supra), decided the matter in\nfavour of the assessee, holding as follows:\n\n      "9. If the facts of the case in hand are considered in the\n      light of the decision of the Hon'ble Jurisdictional High\n      Court (supra), we find that the items sold by the assessee\n      do not fit into the category of scrap as explained by the\n      Hon'ble High Court (supra). Therefore, in our considered\n      opinion, the assessee cannot be treated as an assessee in\n      default and on the impugned sales cannot be treated as\n      sale of scrap thereby making the assessee out of the\n      purview of Section 206C of the Act.\n\n      .......................................................................................\n      ......................................................................................\n\n      11. Facts being similar, respectfully following the findings\n      of the Hon'ble Jurisdictional High Court (supra), we do not\n      find any merit in the impugned demand raised by the A.O.\n\n      12. Considering the facts of the case in the light of the\n      afore-stated decisions of the Hon'ble Jurisdictional High\n      Court, we set aside the findings of the Id. CIT(A) and direct\n      the A.O. to delete the impugned demand."\n\n11.     The facts in either 'Dhasawala Traders vs. ITO' (supra),\nor 'Azizbhai A Lada vs. ITO' (supra), have not been shown to be\nany different from those of the case at hand. The only argument\nis that the Hon'ble High Court has not taken into consideration\nthe Special Bench decision in the case of 'M/s Bharti Auto\n             ITA No.14, 15 & 16/LKW/2019& S.P. No.04, 05 & 06/LKW/2019\n                                                                  Page 13 of 15\n\nProducts vs. CIT-II' (supra). This argument, however, we find, is\nprima facie unsustainable. This is so, because a bare perusal of\nthe judgment of the Hon'ble High Court (supra) reveals that the\nfollowing substantial questions of law had been raised before\ntheir Lordships:\n\n      "(A) Whether the Appellate Tribunal has substantially erred\n      in law in interpreting the term Scrap as defined in clause\n      (b) to Explanation to section 206C of the Income Tax Act by\n      holding that the words 'waste and scrap' is a singular item\n      and not distinct?\n\n      (B) Whether the Appellate Tribunal has substantially erred\n      in law in placing reliance upon the case of Navin Flourine\n      Chemicals despite the fact that the Hon'ble Special Bench\n      in the case of Bharti Auto Products had held that the words\n      'waste and scrap' are two different and distinct words?\n\n      (C) Whether the Appellate Tribunal has substantially erred\n      in deleting the order passed under section 201(1) of the\n      Income Tax Act of Rs.40,16,418/- and interest charged\n      under section 201(1A) of the Act of Rs.23,29,522?\n\n12.     The question of law at item '(B)' above is the one that is\npresently under the scanner.          This question of law specifically\nraises the issue as to whether the Tribunal was not incorrect in\noverlooking 'Bharti Auto Products' (SB) [supra]. The Lordships,\nin para 8 of the judgment, have unambiguously held that since\nthe Tribunal had remitted the matter to the Assessing Officer\nafter recording a finding of fact that the products obtained by the\nassessee in the course of ship breaking activity, are useable as\nsuch, due to which, they do not fall within the definition of scrap,\nthe order of the Tribunal, being based on a finding of fact, did not\ngive rise to any question of law.          The factual matrix remains\nmuch the same in the case at hand. Here also, the assessee is a\ntrader in scrap. Their products are not a result of manufacturing\nprocess carried out by them.\n                ITA No.14, 15 & 16/LKW/2019& S.P. No.04, 05 & 06/LKW/2019\n                                                                     Page 14 of 15\n  13.     In the above view of the matter, it cannot at all be held\n  that while passing their judgment, the Lordships, in 'CIT(TDS) vs.\n  M/s Priya Blue Industries Pvt. Ltd.' (supra), overlooked the\n  Special Bench order in 'Bharti Auto Products' (SB) [supra].\n\n 14.     Even otherwise, this decision of the Hon'ble High Court\n  has been followed by the Tribunal in 'Dhasawala Traders vs. ITO'\n  (supra) and 'Azizbhai A Lada vs. ITO' (supra). The order in\n  'Azizbhai A Lada vs. ITO' (supra) is rendered by a co-ordinate\n  Bench of the Tribunal, to which, no contrary decision has been\n  cited by the Department before us. Further neither 'Dhasawala\n  Traders vs. ITO' (supra) nor 'Azizbhai A Lada vs. ITO' (supra) have\n  been shown to be upset either on appeal or otherwise.\n\n  15.     In    this   view    of   the    matter,    respectfully     following\n  'CIT(TDS) vs. M/s Priya Blue Industries Pvt. Ltd.' (supra), we\n  decide the grounds of appeals taken by the assessee in favour of\n  the assessee.\n\n  16.     Since we have decided the appeals on merit, the stay\n  petitions have become infructuous and hence the same are\n  dismissed as infructuous.\n\n  17.     In the result, the appeals of the assessee are allowed\n  whereas the stay petitions are dismissed.\n\n          Order pronounced in the open Court on 19/02/2020.\n\n          Sd/-                                          Sd/-\n        [A. D. JAIN]                                [T.S. KAPOOR]\n     VICE PRESIDENT                              ACCOUNTANT MEMBER\n\nDATED:19/02/2020\nJJ:0702\n             ITA No.14, 15 & 16/LKW/2019& S.P. No.04, 05 & 06/LKW/2019\n                                                                  Page 15 of 15\n\nCopy forwarded to:\n     1. Appellant\n     2. Respondent\n     3. CIT(A)\n     4. CIT\n     5. DR\n                                                                        By order\n\n                                                        Assistant Registrar