PCIT(TDS) Kolkata Vs Nirmal Kumar Kejriwal(Calcutta High Court)
Date- 22nd July 2022
Sub-Whether trading in Sawn timber is liable for collection of tax at source u/s 206C of the Income-tax Act,1961. Difference between Logs and Sawn timber Explained.

The Division bench of Calcutta High Court in this case was considering department’s appeal which challenged the relief granted by ITAT by holding that the trading in Sawn timber was not liable for collection of TCS u/s 206C of the Act which dealt with forest produce and sawn timber could not be said to be forest produce. The Hon’ble judges while dismissing the department’s appeal interalia relied on the decision of the Andhra Pradesh Forest Development corporation ltd Vs ACIT also referred to Calcutta high court decision in the case of Andaman and Nicobar Islands Forest and Plantation Development Corporation Ltd. vs. Commissioner of Income Tax reported in (2006) 280 ITR 118 (Cal) wherein it was held that de-embarking and seasoning tree trunks and converting them into logs would amount to production of a new commercial article or thing within the meaning of Sections 32AB, 80HH and 80J of the Act. Thus, when conversion of logs into sawn timber amounted to manufacture, it was clear that Section 206C does not apply to sawn timber which only applied to forest produce and sawn timber could not be said to be forest produce.

The decision correctly analyses the provisions of Section 206C and will be helpful in interpretation of the said section

Ramesh Patodia
29-07-2022