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TMI Blog2015 (7) TMI 908X X X X Extracts X X X X X X X X Extracts X X X X ..... levant to the impugned assessment years sold wood pulp to three concerns namely (i) Mysore Paper Mills Ltd., Bhadravathi, (ii) West Coast Paper Mills Ltd., Dandeli and (iii) Harihar Poly Fibres Ltd.,Kumarapallanam. Assessee is a State Government undertaking and has, as per its website the following objects: "1. To develop land for raising forest plantations and in particular Eucalyptus, Bamboo, Tropical Pines, Rubber, Cashewnut, Cocoa, Tea, Coffee and such other suitable species in the State of Karnataka, for the purpose of development of industries based on their produce. 2. To plant, grow, cultivate, produce and raise plantations of all kinds of varieties of forest plants, trees and crops and natural products of every kind and other agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice. Reply of the assessee was that: i. The buyers were manufacturers and not traders and the wood pulp was used for manufacture. ii. Wood pulp sold by it was not a forest produce. iii. Wood used for pulping was not spontaneous growth, but cultivated by the assessee on leased forest land. Along with the above reply assessee also filed a declaration from the buyer in Form 27C in which they affirmed that the wood pulp was being used for their manufacturing activity only. 4. However, the AO was not impressed by the above reply. According to him: i. Wood pulp was a type of goods falling under item (v) of the Table given in section 206C(1), viz., forest produce ii. Declaration in Form 27C filed by the assessee was not complete since pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 was filed before the AO during the course of the proceedings. ii. Delay in filing copy of the declaration can invite penalty under section 272A(2)(j) of the Act but cannot render the assessee, one in default. iii. Form 27C was filed for both the parties viz., West Coast Paper Mills Ltd., and Harihar Polyfibres Ltd., but these were brushed aside only for a technical reason of delay. iv. Once the buyer were using the wood pulp for their manufacturing process, the seller was not bound to collect tax at source from the buyer. The ld.AR relied on a judgment of Hon'ble Madras High Court in the case of CIT vs. Adisankar Spinning Mills (P) Ltd., (2014) 362 ITR 233 in support of his argument that delay in filing Form 27C was only a technic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 206C(1A), 206(1B) and rule 37C which prescribed Form 27C. "206C. Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc.- (1) Every person, being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer of any goods of the nature specified in column (2) of the Table below, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income-tax: TABLE Sl.No. Nature of goods Percentage i) Alcoholic Liquor for human consump ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the goods referred to in column (2) of the aforesaid Table are to be utilised for the purposes of manufacturing, processing or producing articles or things and not for trading purposes. (1B) The person responsible for collecting tax under this section shall deliver or cause to be delivered to the Chief Commissioner or Commissioner one copy of the declaration referred to in sub-section (1A) on or before the seventh day of the month next following the month in which the declaration is furnished to him." "Declaration by a buyer for no collection of tax at source under section 206C(1A). 37C. (1) A declaration under sub-section (1A) of section 206C to the effect that any of the goods referred to in the Table in sub-section (1) of that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uyer and not the month or date on which sale is affected by the assessee. Even if we consider that there is a breach on the part of the assessee in not obtaining the declaration from the buyer the moment a sale was affected, and in filing it before the CCIT or CIT, as the case may be, a similar breach was considered to be only technical and one that could be condoned by Hon'ble Madras High Court in the case of Adisankar Spinning Mills (P) Ltd., (supra). In the said case, assessee had filed Form 27C subsequent to the proceedings, through a rectification petition under section 154, but still considered to be sufficient compliance, which view of the Tribunal was confirmed by Hon'ble Madras High Court. Proceedings on the assessee for th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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