Tcs on sale of scrap

The waste that is arising from newspapers, scrapped, packing material, old machinery, etc. which are not produced for the manufacture, is not considered as scrap.

Navine Fluorine International Ltd. vs. Assistant Commissioner of Income Tax ((2011) 139 TTJ (Ahd) 248:

In this case, Hon’ble Ahmedabad Tribunal held as under:

“The Expln. (b) to s. 206C provides the meaning of scrap means "waste and scrap from manufacture or mechanical working of material which is definitely not usable as such because of breakage, cutting up, wear and 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 is "which is" definitely not usable. The word "is" as used in this definition of the scrap meant for singular item i.e., "waste and scrap". The word waste "which is" denotes to singular item and thus the singular item would be waste and scrap. The words waste and scrap thus cannot be read differently as is argued by the Departmental Representative. The scrap sold by the assessee is not connected with manufacture or mechanical working of material. Since assessee is engaged in manufacturing of fluorine and other refrigerant gases the scrap items sold viz. drums, plastic drums, plastic bags, used oil wooden scrap, scrap electrical cables, empty bromine crates etc. cannot be used for manufacturing or mechanical working of material of fluorine and other refrigerant gases and hence such items would not form part of the definition of the scrap and consequently, assessee was not required to deduct tax under s. 206C(6).” 

Tnq sir ...