ITAT rules export incentives as income under Section 80IB

The Appellate Tribunal ITAT VISAKHAPATNAM dismissed the Revenue's appeal against the Ld. CIT(A)'s decision in favor of the assessee regarding the allowability of income under Duty Draw Back and MEIS scheme for claiming deduction under Section 80IB of the Income Tax Act, 1961. The Tribunal held that these export incentives should be treated as income under the head "profits and gains from business or profession," citing the judgment in CIT vs. Meghalaya Steels Ltd.

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Issues:
The judgment involves the issue of the allowability of income under Duty Draw Back and MEIS scheme for the profits derived from an eligible industrial undertaking for claiming deduction under Section 80IB of the Income Tax Act, 1961.

Summary:

Issue 1:
The appeal by the Revenue was against the order of the Ld. Commissioner of Income Tax (Appeals) regarding the deduction claimed under Section 80IB(11A) of the Act for the AY 2018-19.

The assessee, engaged in the business of export of frozen shrimp and other sea foods, claimed a deduction under Section 80IB(11A) amounting to Rs. 73,58,97,729/- on the net profits derived from a specific unit. The Revenue contended that export incentives like Duty Draw Back and MEIS cannot be considered as profit derived from an industrial undertaking. The Ld. CIT(A) allowed the appeal of the assessee based on previous judgments. The Revenue appealed against this decision.

Issue 2:
The main contention was whether export incentives like Duty Draw Back and MEIS should be considered as income derived from an industrial undertaking for the purpose of claiming deduction under Section 80IB(11A) of the Act.

The Ld. DR argued that these incentives cannot be considered as income from the industrial undertaking, citing the judgment in M/s. Liberty India vs. CIT. On the other hand, the Ld. AR argued that the judgment in CIT vs. Meghalaya Steels Ltd should prevail, emphasizing the direct link between these incentives and the activities of the industrial undertaking.

Decision:
The Tribunal considered the legislative intent behind the insertion of a clause to section 28 of the Act and referred to relevant sections of the Act. Relying on the judgment in Meghalaya Steels Ltd, the Tribunal held that export incentives like Duty Draw Back and MEIS should be treated as income under the head "profits and gains from business or profession." The Tribunal dismissed the Revenue's appeal, upholding the order of the Ld. CIT(A) in favor of the assessee.

This summary provides a detailed overview of the legal judgment, highlighting the key issues, arguments presented, and the final decision of the Appellate Tribunal ITAT VISAKHAPATNAM.

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