Section 80QQ deduction must follow set-off of trading loss; income is computed after adjustment under sections 70 and 80AB.

Deduction under section 80QQ had to be computed only on the income remaining after setting off the assessee's trading loss, because section 80AB requires the income of the specified nature to be computed in accordance with the Act before any Chapter VI-A deduction is allowed. Since the trading loss was a business loss under the same head, section 70 required it to be adjusted against the profit from printing and publishing in arriving at gross total income. The earlier authority relied on by the assessee was distinguished because it did not consider section 80AB, while the later binding authority treated that provision as declaratory. The issue was resolved in favour of the Revenue.

---

---

Issues: Whether deduction under section 80QQ of the Income-tax Act, 1961 was to be computed on the gross income before setting off business loss, or on the income after such set-off.

Analysis: Section 80AB governs deductions under the relevant part of Chapter VI-A and requires that the income of the nature specified in the deduction provision be computed in accordance with the Act before making the deduction. Under section 70, loss from one business source under the same head is to be set off against profit from another source in arriving at gross total income. The assessee's trading loss, being a business loss under the same head, had therefore to be adjusted against the profit from printing and publishing before computing the deduction under section 80QQ. The prior authority relied on by the assessee did not consider the effect of section 80AB, whereas the later binding authority treated that provision as declaratory.

Conclusion: Deduction under section 80QQ had to be computed on the income after setting off the trading loss, and not on the gross income before such set-off. The issue was answered against the assessee and in favour of the Revenue.

---