Products Generated out of Manufacturing can’t be categorized as ‘Scrap or Waste’ and Agents providing help are considered as Contractors and not Professionals: ITAT [Read Order]

ITAT - documentary evidence - Products - Manufacturing - ITAT -Taxscan

The Income Tax Appellate Tribunal (ITAT) in the case of DCIT vs. M/s Gujarat Ambuja Export Ltd. dismissed the appeal in favour of the respondent and held that the manufacturing of products can not be categorised as ‘scrap or waste’ and also while addressing the second issue held that the agents providing help will be considered as contractors and not the professionals.

The respondent, in this case, is M/s Gujarat Ambuja Export Ltd. which is an agro-processing industry and is indulged in manufacturing de-oiled cake, refining, edible oil, maize processing for starch, etc., the DCIT treated the assessee to be in default and called for reasons. The assessee contended that the agriculture-based products undergo a due process of manufacturing so it must not be categorized into  ‘scrap and waste’. Further, the assessee also contended that the payment is made by the Gujarat Ambuja Export Ltd. to the C&F agents who help the industry so C&F agents should be considered to be the ‘contractors’ and not the ‘professionals’.

Wherefore, the two significant issues were raised, namely:

  1. Whether the products manufactured can be categorized into ‘scrap or waste’ or not?
  2. Whether the C&F agents who are helping the assessee will be considered to be the professionals or contractors?

The Income Tax Appellate Tribunal (ITAT) comprising of Waseem Ahmed, Account Member, and Rajpal Yadav, Judicial Member addressed both the issues and have taken into consideration the previous orders held that the products which are going through the proper manufacturing procedure can not be categorized as ‘scrap or waste’. Further, the payment made to the C&F agent for their help, those agents will be considered as the contractors and not the professionals.

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