Grabban joined Norwich in June 2014 after scoring 35 goals in 86 league games for Bournemouth and has scored 12 times for Norwich as they won promotion last season.
Bournemouth, also reported to have made offers for Crystal Palace's Glenn Murray, wanted to take Grabban back despite a hat-trick from Callum Wilson in their first-ever Premier League victory at West Ham on Saturday by 4-3.
Neil told reporters that he was more interested in signing another striker himself.
"Lewis is an important member of the squad and I'm not interested in selling him to one of our direct competitors," he said.
(Reporting by Steve Tongue; editing by Amlan Chakraborty)
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