Section 80J deduction must be computed on net profits after carried-forward set-offs, not gross undertaking profits.

Section 80J relief was computed on the net amount remaining after set-off of unabsorbed development rebate, business loss and similar carried-forward adjustments, not on the gross profits of the new industrial undertaking. The governing principle was that tax relief of this kind must follow the amount actually chargeable under the statutory computation scheme, after prior-year adjustments are applied. On that basis, the deduction was restricted to the net figure, and the issue was answered in favour of the Revenue.

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Issues: Whether relief under section 80J is to be computed on the gross profits of a new industrial undertaking included in the total income or only on the net amount remaining after setting off unabsorbed development rebate, business loss, and similar carried-forward adjustments.

Analysis: The assessment years fell within the regime of the Income-tax Act, 1961. The question turned on the computation base for section 80J relief. Applying the principle that tax relief is to be worked out on the amount actually chargeable after statutory computation adjustments, the Court followed the Supreme Court's approach that a deduction of this nature cannot be founded on the gross figure where the income has to be determined only after set-off of eligible prior-year adjustments.

Conclusion: The deduction under section 80J is to be computed on the net amount after set-off, not on the gross amount of profits from the new industrial undertaking; the question was answered in favour of the Revenue.

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