Section 80HH deduction limited to industrial undertaking profits, not entire business income where other business profits are earned.

Deduction under section 80HH is confined to profits and gains derived from the eligible industrial undertaking, and cannot be extended to income from other business activities. Where only part of the assessee's income is attributable to the industrial undertaking and no profit is shown from the concerned factory, relief is not allowable on the entire business income. The record did not justify treating non-eligible business profits as qualifying income merely because the assessee carried on an industrial undertaking. The question was answered in the negative, in favour of the Revenue.

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Issues: Whether deduction under section 80HH of the Income-tax Act, 1961 is allowable on the assessee's entire business income when only part of the income is derived from the industrial undertaking and no profit is shown from the concerned factory.

Analysis: Section 80HH permits relief only to the extent of profits or gains derived from the industrial undertaking. Where the assessee carries on other business as well, deduction cannot extend to income not attributable to the eligible industrial undertaking. The record did not support allowance of deduction on the whole business income merely because the assessee had an industrial undertaking.

Conclusion: Deduction under section 80HH is confined to profits derived from the industrial undertaking and is not available on other business profits. The question was answered in the negative and in favour of the Revenue.

Ratio Decidendi: Relief under section 80HH is restricted to profits and gains directly derived from the eligible industrial undertaking and cannot be claimed on income from other business activities.

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