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TMI Blog2013 (12) TMI 537X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 for the assessment year 2007-08 are reproduced hereunder, as the grounds raised in other appeals are also identical: "1. That on facts and the circumstances of the case and the provisions of law, treating molasses, generated during sugar production, as scrap and making the sale of molasses liable to the provisions of section 206C of the Income Tax Act, 1961 is wrong, Molasses is not scrap and the provisions of collection of tax at source are not applicable to the same. 2. That appellant craves permission to raise additional grounds and to amend or alter the foregoing grounds before the appeal is finally decided." 2. The brief facts are that the assessee is a Cooperative Society and is engaged in manufacturing of sugar. Inspection u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Molasses and similarly as regards to Bagasses, the same is being sold to M/s. ABC Paper Mill Ltd; for manufacture of pulp, paper and building materials. No tax has been collected at source nor any declaration u/s 27C has been obtained from the company. With the same analogy, the assessee has not complied with the provisions governing collection of tax at source on the sale of bagasse also and AO was satisfied that the assessee was liable to collect tax at source on sale of molasses and bagassse since the same waste in the assessee's business which is manufacture of sugar and the assessee has failed to collect the tax at source and is in default and also liable to pay tax involved to the credit of Central Govt. A/c within the meaning of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 206C(7) of the Act. 5. The Ld. counsel for the assessee stated that the ld. first appellate authority has rightly deleted the addition on account of Bagasses in the impugned year which has been upheld by this Bench vide order dated 19.11.2012 in assessee's own case in the appeal filed by the Revenue in ITA Nos.311 to 314(Asr)/2012 [ITO, (TDS)-1, Jalandhar vs. M/s. Nawanshhar Co-op Sugar Mills Ltd; Nawanshahar) and the AO has made the addition on account of Molasses on the same analogy, as applicable on the sale of Bagasses. But the ld. CIT(A) has wrongly made the addition in dispute by upholding the action of the AO in holding the assessee to be in default under section 206C(6) of the Act, in respect of sale of Molasses. He further sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SSS Maryadit vs. State of Maharashtra AIR [2001] SC, 1980 in which it was held as under:- "It is a cardinal principle of interpretation of statute that the words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning, unless such construction leads to some absurdity or unless there is something in the context or in the object of the statute to suggest to the contrary. The golden rule is that the words of a statute must prima facie be given their ordinary meaning. It is yet another rule of construction that when the words of the statute are clear, plain and unambiguous, then the courts are bound to give effect to that meaning, irrespective of the consequences. It is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d other reasons. In the above definition the important words used in the definition of scrap are "waste and scrap" - "from manufacture" and "which is". The word "waste and scrap" are one item. Thereafter, the word used is "from" the manufacture or mechanical working of material. It would mean that the waste and scrap being one item should arise from the manufacture or mechanical working of material. It is, therefore, necessary to read the words waste and scrap together which are generated out of manufacturing process of the assessee. The words waste and scrap should have nexus with the manufacturing or mechanical working of material. Thereafter, the word used in "which is" definitely not usable. The word "is" as used in this definition of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble Supreme Court as well as the Hon'ble High Courts, we are of the view that Molasses is not a scrap as held by the Revenue Authorities in the impugned orders. It is not waste or scrap and cannot be used as such. Thus it does not fall within the meaning of scrap as defined in Explanation (b) to section 206C of the Act. Therefore, the assessee cannot be held to be in default and is not required to deduct tax under section 206C(6) of the Act on the Molasses and no interest could be charged under section 206(7) of the Act, as charged by the Revenue Authority in the impugned order. As pointed out in the fore-going paragraphs that the ld. first appellate authority has deleted the addition on account Bagassese itself in the impugned yea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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