2015 (10) TMI 311

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.....2013. 2. The assessee is engaged in the business of purchase and sale of slacked lime powder. He is also doing business in granites and mining activity. The assessment for the impugned assessment year was completed under sec. 143(3). Thereafter, the Commissioner of Income-tax issued a show cause notice to the assessee under sec.263 of the Act, on 12.11.2012. In the said notice, the observations made by the Commissioner of Income-tax are as follows : "2.1 It is seen from the Miscellaneous Records that the following aspects need further scrutiny: (i) TDS was not made on Granite Export Expenses for ocean charges paid to Shipping agencies of any amount of Rs. 1,60,87,108 u/s.195. (ii) The amount of Rs. 8,17,258 debited towards mach....

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....s neither erroneous nor prejudicial to the interests of the Revenue. But the Commissioner of Income-tax rejected all the explanations offered by the assessee and passed the revision order. In his revision order, he has determined the total income of the assessee at Rs. 3,20,18,804/- against an assessed income of Rs. 27,18,640/-. The additions have been made by the Commissioner of Incometax against granite export expenses, granite marking and inspection charges, granite inspection expenses, quarry development expenses etc. 4. The assessee is aggrieved and, therefore, the present appeal before us. The grounds are : "2. The Commissioner erred in invoking the revisionary powers merely for roving enquiry based on Audit Objection and not ba....

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....and Shri Durgesh Sumrott, the learned Commissioner of Income-tax appearing for the Revenue. 6. The first point objected to by the Commissioner of Income-tax is that the assessee has not made TDS on granite export expenses for ocean freight charges. Regarding the shipping charges, there is a Circular issued by the CBDT. The said Circular No.723 dated 19.9.1995 states that where the provisions of sec.172 are to apply, the provisions of sections 194C and 195 relating to tax deduction at source are not applicable. Acting on the above Circular, ITAT, Ahmedabad Bench 'C', has held in the case of DCIT v. Hasmukh J. Patel, 49 SOT 197, that where the provisions of sec.172 would apply, no deduction of tax is required under sec.194C. A similar deci....

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....he said expenditure under sec.40(a)(ia). Because of this contradiction, this objection made by the Commissioner of Income-tax cannot survive. Moreover, the view taken by the Assessing Officer on machinery spare parts as revenue expenditure is a possible view. 9. The third item pointed out by the Commissioner of Income-tax relates to granite marking and inspection charges. Those charges were made by the assessee outside India for the purpose of export trade. All services are rendered outside India except for quality verification of granites in India. Where such payments are made for the purpose of business carried outside India and payments made to non-residents, there is no requirement of deducting any tax at source, as held by the Hon'b....