TMI Blog2023 (9) TMI 1315X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - Shri Duvvuru Rl Reddy, Hon ble Judicial Member And Shri S Balakrishnan, Hon ble Accountant Member For the Assessee : Sri GVN Hari, AR For the Revenue : Dr. Satya Sai Rath, CIT-DR ORDER PER S. BALAKRISHNAN, ACCOUNTANT M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Ltd vs. CIT reported in [2009] 317 ITR 218 (SC) considered that the income from Duty Draw Back Schemed and MEIS scheme are not allowable for deduction u/s. 80IB(11A) of the Act and hence considered the order of the Ld. CIT(A) as erroneous and prejudicial to the interests of the Revenue. The Ld. Pr. CIT therefore directed the Ld. AO to recompute the assessee s income by disallowing the assessee s claim of deduction u/s. 80IB(11A) of the Act by providing one more opportunity to the assessee. Aggrieved by the order of the Ld. Pr. CIT, the assessee is in appeal before us by raising the following grounds of appeal: 1. The order of the Ld. Pr. CIT is contrary to the facts and also the law applicable to the facts of the case. 2. The Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eard both the sides and perused the material available on record and the orders of the Ld. Revenue Authorities. Admittedly, the assessee has claimed a deduction of Rs. 4,86,59,368/- u/s. 80IB(11A) of the Act after considering the adjustments of depreciation and other expenditure. It is also found that the assessee has received an income of Rs. 4,38,01,028/- from Duty Draw Back and Rs. 5,39,69,173/- 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) 383 ITR 217 has allowed deduction of export incentives namely Duty Drawback scheme, Duty Entitlement Pass Book Scheme (DEPB) inI.T.A. No.158/Viz/2022 (AY: 2018-19)in the case of Assistant Commissioner of Income Tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... berty India (supra), this Court distinguished Duty Entitlement Pass Book and Duty Drawback Schemes and specifically observed that the DPEB / Duty Drawback Scheme is not related to the business of an industrial undertaking for manufacturing or selling its products and the DEPB entitlement arises only when the undertaking goes on to export the said product, that is, after it manufactures or produces the same. In paragraph 20, in the case of Meghalaya Steels Limited (supra), while distinguishing the profit derived from DEPB / Duty Drawback, it is observed and held as under:- 20. Liberty India [Liberty India v. CIT, (2009) 9 SCC 328] being the fourth judgment in this line also does not help the Revenue. What this Court was concerned with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision taken in the case of Meghalaya Steels Limited (supra) is contrary to the decisions in the case of Sterling Foods, Mangalore (supra) and Liberty India (supra). On the contrary, the observations made in paragraph 20 can be said to be in favour of the Revenue and against the assessee. 8. In view of the above and for the reasons stated above, the High Court has rightly held that the respondent assessee is not entitled to the deductions under Section 80-IB on the amount of DEPB as well as Duty Drawback Schemes. We hold that on the profit earned from DEPB / Duty Drawback Schemes, the assessee is not entitled to deduction under Section 80-IB of the Act, 1961. Any contrary decision of any High Court is held to be not good law. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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