Section 10A deduction is undertaking-specific and cannot be reduced by losses or depreciation of other units.

Section 10A relief is computed undertaking-wise on the eligible unit's profits, not by first setting off brought forward losses or unabsorbed depreciation of other units. The Chapter VI-A aggregation and set-off rules under sections 80A and 80AB do not govern a claim under Chapter III, so profits of the eligible undertaking are reduced independently for the deduction computation. Authorities relied on by the Revenue were distinguished on the statutory scheme and facts. The deduction under section 10A therefore could not be denied merely because other units had prior losses or depreciation, and the assessee's claim was allowed.

---

---

Issues: Whether deduction under section 10A is to be allowed on the profits of the eligible undertaking without setting off the brought forward losses and unabsorbed depreciation of other units.

Analysis: Section 10A is undertaking-specific. The profits of the eligible unit are to be computed with reference to that undertaking and are to be reduced while computing business income, not by first aggregating losses of non-eligible units or applying the Chapter VI-A set-off mechanism. The provisions of sections 80A and 80AB, which operate in Chapter VI-A after gross total income is computed, do not govern a claim under section 10A in Chapter III. The authorities relied on for the Revenue were distinguished on facts and on the statutory scheme.

Conclusion: Deduction under section 10A cannot be denied by setting off the brought forward losses and unabsorbed depreciation of other units. The claim was rightly allowed in favour of the assessee.

Ratio Decidendi: Deduction under section 10A must be computed undertaking-wise on the eligible unit's profits, without first reducing losses or depreciation of other units under the Chapter VI-A set-off scheme.

---