Section 80AB requires Chapter VI-A deductions to factor in both profits and losses before computing section 80-I relief.

Section 80AB controls deductions under Chapter VI-A and requires the deduction base to be computed on income determined under the Act after giving effect to both profits and losses. A deduction under section 80-I cannot be calculated by isolating the profits of the manufacturing business while ignoring a loss from the leasing business forming part of the assessee's total income. Earlier authority supporting an isolated profit approach was treated as inapplicable because it did not account for section 80AB. The operative position is that the loss from the leasing business must be considered before computing the section 80-I deduction.

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Issues: Whether deduction under section 80-I was to be computed only on the profits of the manufacturing business or after taking into account the loss incurred in the leasing business, in the light of section 80AB.

Analysis: Section 80AB governs deductions within Chapter VI-A and has overriding effect over the other deduction provisions in that Chapter. The computation of income for such deduction must be made in accordance with the Act, which requires profits and losses to be taken together. The later Supreme Court authorities made it clear that deduction cannot be granted on isolated profits of one business unit while ignoring losses from another activity forming part of the assessee's total income. The reliance placed on older authority dealing with section 80-I without considering section 80AB was held to be misplaced.

Conclusion: The deduction under section 80-I had to be computed after considering the loss from the leasing business, and the assessee was not entitled to ignore that loss for the purpose of the deduction.

Ratio Decidendi: For deductions under Chapter VI-A, section 80AB requires computation on the income as determined under the Act after giving effect to both profits and losses, and it overrides contrary claims based on isolated business profits.

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