2023 (9) TMI 1315 - AT - Income Tax

Income Tax Appeal Dismissed: No Deduction for Duty Draw Back & MEIS Income under Section 80IB(11A)

Aquatica Frozen Foods Global (P) Ltd., Visakhapatnam. Versus ACIT, Circle-1 (1), Visakhapatnam

The Tribunal dismissed the assessee's appeal, upholding the disallowance of the deduction claimed for income received from Duty Draw Back Scheme and MEIS ... Revision u/s 263 - Deduction u/s 80IB(11A) - disallowance of deduction received from Duty Draw Back Scheme and from MEIS - HELD THAT:- Admittedly, the assessee has claimed a deduction u/s. 80IB(11A) after considering the adjustments of depreciation and other expenditure. As also found that the assessee has received an income from Duty Draw Back and from MEIS. This Bench by relying on the decision of the Hon’ble Supreme Court in the case of CIT vs. Meghalaya Steels Limited [2016 (3) TMI 375 - SUPREME COURT] has allowed deduction of export incentives namely Duty Drawback scheme, Duty Entitlement Pass Book Scheme (DEPB) in the case of Nekkanti Sea Foods Limited [2023 (3) TMI 822 - ITAT VISAKHAPATNAM] - subsequently in the case of M/s. Saraf Exports [2023 (4) TMI 420 - SUPREME COURT] has clearly held that the income received from Duty DrawBack and DEPB schemes are not derived from the industrial undertaking and hence not allowable as deduction u/s. 80IB(11A). Decided against assessee. Issues:The judgment involves the disallowance of deduction claimed under section 80IB(11A) of the Income Tax Act, 1961 for income received from Duty Draw Back Scheme and Merchandise Exports from India Scheme (MEIS).Facts of the Case:The assessee, engaged in the sale of shrimps, filed its return of income for the AY 2017-18, declaring a total income of Rs. NIL. The assessing officer disallowed a portion of self-made vouchers while framing the assessment under section 143(3) of the Act. The Principal Commissioner of Income Tax-1, Visakhapatnam, exercising powers under section 263, found that the deduction claimed under section 80IB(11A) was not allowable for income received from Duty Draw Back Scheme and MEIS. The assessee appealed against this decision.Contested Issue:The only issue contested by the assessee was the disallowance of deduction claimed for income received from Duty Draw Back Scheme and MEIS under section 80IB(11A) of the Act.Arguments and Decision:The assessee argued that recent decisions by the Supreme Court indicated that income from Duty Draw Back and DEPB schemes are not eligible for deduction under section 80IB(11A). The Tribunal considered these arguments and the orders of the Revenue Authorities. While past decisions allowed deductions for export incentives, the Supreme Court's ruling in the case of M/s. Saraf Exports clarified that income from Duty Draw Back and DEPB schemes is not derived from the industrial undertaking and thus not eligible for deduction under section 80IB(11A). The Tribunal upheld the order of the Principal Commissioner under section 263 based on the Supreme Court's decision.Conclusion:In line with the Supreme Court's ruling, the Tribunal dismissed the appeal of the assessee, affirming the disallowance of the deduction claimed for income received from Duty Draw Back Scheme and MEIS under section 80IB(11A) of the Act.Final Decision:The appeal of the assessee was dismissed by the Tribunal, following the Supreme Court's decision, and there was no order as to costs.