Export incentives deductible u/s 80IB(11A)

Nekkanti Sea Foods Limited Vs PCIT (ITAT Visakhapatnam)

That the export entitlements (MEIS) and the duty drawback of promotion scheme is an income asssessable under the head “profits or gains from business or profession” accordingly, eligible for deduction u/s 80IB(11A).

Facts- The assessee is engaged in the business of export of frozen shrimp and other sea foods. The assesses filed its ROI for the AY 2017-18 declaring a total income of Rs. 52,30,54,010/-. After processing the ROI U/s. 143(1), the case was selected for complete scrutiny under CASS and accordingly statutory notices U/s. 143(2) and 142(1) were issued in electronic format to the assessee calling for the information. The assessee’s representative filed its reply on line through e-filing portal. AO on examination of the information furnished by the assessee made a disallowance U/s. 14A r.w.r 8D for Rs.28,57,443/-. Thereafter, the Ld. Pr. CIT invoking the powers vested U/s. 263 of the Act noticed that the assessment order passed is prima facie erroneous and prejudicial to the interest of the Revenue for the following reasons:

An amount of Rs. 22,82,85,812/- claimed as 80IB(11A) deduction by the assessee-company was allowed by the AO without properly examining the issue that the income on which deduction was claimed is derived from the business of industrial undertaking or not.

The Ld. Pr. CIT issued a notice to the assessee on 5/3/2021. In response, the assessee-company made its submissions on 22/3/2021. Considering the submissions made by the assessee, the Ld. Pr. CIT directed the AO to disallow a sum of Rs. 10,24,00,779/- arising from the receipt of duty draw back and Rs. 6,89,08,253/- arising from the sale of licenses considering it as not derived from the industrial undertaking so as to entitle the assessee to claim the benefit of deduction u/s. 80IB(11A) of the Act. Aggrieved by the order of the Ld. Pr. CIT, the assessee is in appeal before us.

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