2023 (9) TMI 1315

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....43(3) of the Income Tax Act, 1961 [the Act] for the AY 2017-18. 2. The facts of the case are that the assessee is engaged in the business of sale of shrimps which includes processing, preservation, packaging and export of shrimp products, filed its return of income for the AY 2017-18 on 16/12/2017 declaring a total income of Rs. NIL. Subsequently, the case was selected for scrutiny under CASS and statutory notices u/s. 142(1) of the Act was issued on 30/08/2019 and served through ITBA portal. The Ld. AO considering the submissions made by the assessee disallowed 6% of the self-made vouchers of Rs. 3,41,25,018/- amounting to Rs. 20,47,501/- while framing the assessment U/s 143(3) of the Act. Subsequently, the Ld. Pr. CIT-1, Visakhapatnam wh....

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....ng Officer to disallow the deduction of Rs. 4,86,59,368/- claimed by the appellant u/s. 80IB(11A) of the Act. 4. The Ld. Pr. CIT is not justified in holding that the duty draw back of Rs. 4,38,01,028/- and MEIS income of Rs. 5,39,69,173/- are not eligible for deduction u/s. 80IB(11A) of the Act. 5. For any other ground that may be urged at the time of appeal hearing." 3. The only issue contested by the assessee in this appeal is with respect to disallowance of deduction of Rs. 4,38,01,028/- received from Duty Draw Back Scheme and Rs. 5,39,69,173/- from MEIS as not eligible for deduction u/s. 80IB(11A) of the Act. 3. At the outset, the Ld. AR submitted that consequent to the recent decision of the Hon'ble Supreme Court in the case of M....

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....as deduction u/s. 80IB(11A) of the Act. The Hon'ble Supreme Court in its order (supra) in paras 7.7 and 8 held as follows: "7.7 Insofar as reliance placed by the learned counsel for the assessee upon the subsequent decision of this Court in the case of Meghalaya Steels Limited (supra) is concerned, at the outset, it is required to be noted that in the case of Meghalaya Steels Limited (supra), it was a case of three subsidies, namely a) Transport Subsidy, b) Interest Subsidy, and c) Power Subsidy and in that context this Court observed and held that since these subsidies directly affect the cost of manufacturing, they have a direct nexus with the profits and gains of the undertaking and since these subsidies have a direct nexus, they can b....

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....is, after it manufactures or produces the same. Pithily put, if there is no export, there is no DEPB entitlement, and therefore its relation to manufacture of a product and/or sale within India is not proximate or direct but is one step removed. Also, the object behind DEPB entitlement, as has been held by this Court, is to neutralise the incidence of customs duty payment on the import content of the export product which is provided for by credit to customs duty against the export product. In such a scenario, it cannot be said that such duty exemption scheme is derived from profits and gains made by the industrial undertaking or business itself." Thus, from paragraph 20 of the said decision, it can be seen that this Court did not disappro....