Section 80-IB deduction can be claimed on one profitable eligible unit without netting off losses of other eligible undertakings.

Deduction under section 80-IB was allowable on the profits of one independently identifiable eligible industrial undertaking without first setting off losses of other eligible undertakings. The provision was treated as unit-specific, focusing on the profits and gains derived from each undertaking, while the Chapter VI-A ceiling under sections 80A and 80B(5) was recognised as a separate constraint operating at the gross total income stage. As the assessee had positive gross total income and the profitable unit's income was separately ascertainable, the losses of other eligible units were not required to be adjusted against that profit for section 80-IB purposes.

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Issues: Whether deduction under section 80-IB of the Income-tax Act, 1961 could be allowed on the profit of one eligible industrial undertaking without setting off the losses of other eligible undertakings.

Analysis: Section 80-IB allows deduction with reference to the profits and gains derived from such industrial undertaking. The provision does not speak of an aggregate of profits and losses of all eligible units. The ceiling under Chapter VI-A operates with reference to gross total income under section 80A and section 80B(5), but that restriction is distinct from the computation of the eligible profit of each undertaking. Where the assessee has positive gross total income and the profit of one eligible unit is independently identifiable, the loss of another eligible unit is not required to be adjusted against such profit for the purpose of allowing deduction under section 80-IB. The earlier authorities relied on by the Revenue were found inapplicable because they turned on a different factual position where gross total income was nil or brought forward losses were involved.

Conclusion: Deduction under section 80-IB was allowable on the profit of the profitable eligible unit without reducing the losses of the other eligible units, and the assessee succeeded.

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