Case Law Details
ACIT Vs Nekkanti Sea Foods Limited (ITAT Visakhapatnam)
ITAT Visakhapatnam held that the export entitlements is an income assessable under the head “profits or gains from business or profession” as per clause (iiib) and (iiid) to section 28 of the Income Tax Act, 1961.
Facts- AO found that the assessee has claimed deduction U/s. 80IB(11A) of the Act amounting to Rs. 73,58,97,729/- on the net profits derived from J. Timmapuram Unit. AO found that the above net profit included other operating revenue such as Duty Draw Back of Rs. 10,59,37,013/- and sale of licenses of Rs. 28,16,55,312/-.
AO therefore issued a show cause notice proposing to reduce the receipts on account of duty draw back and sale of licenses from the net profit of the undertaking. Considering the reply submitted by the assessee, AO did not accept the explanations and considered that the export incentives such as Duty Draw Back, Merchandise Exports from India Scheme (MEIS) cannot be considered as profit derived from industrial undertaking and disallowed an amount of Rs. 41,12,94,414/-. Aggrieved by the order of the Ld. AO, the assessee filed an appeal before the CIT(A) which was allowed. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that in the assessee’s own case for the AY 2017-18, this Bench has held that the export entitlements is an income assessable under the head “profits or gains from business or profession” as per clause (iiib) and (iiid) to section 28 of the IT Act, 1961. Respectfully following the above precedents, we hold that the export incentives such as Duty Draw Back and MEIS is an income assessable under the head ‘profits or gains from business or profession’ as per clause (iiib) and (iiid) to section 28 of the Act. In view of the above, the grounds raised by the Revenue are dismissed.
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