Separate computation of co-operative deduction prevents loss from one eligible activity reducing profit from another.

Deduction under section 80P(2)(a) is computed separately for each qualifying co-operative activity, and the profit of one eligible activity cannot be reduced by a loss from another eligible activity. Applying section 80AB, the court treated Chapter VI-A deduction as confined to the income of the particular qualifying source as computed under the Act, and read the phrase "profits and gains attributable to any one or more such activities" as supporting separate computation. The provision was noted to advance the co-operative sector by granting full relief on profits from each qualifying activity, without inter se set-off against losses from another eligible activity.

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Issues: Whether deduction under section 80P(2)(a) of the Income-tax Act, 1961 is to be allowed with reference to the profits attributable to each eligible activity separately, without setting off the loss incurred in another eligible activity.

Analysis: The co-operative society carried on more than one activity qualifying for deduction under section 80P(2)(a). The court applied section 80AB and held that deduction under Chapter VI-A is computed on the income of the particular source or activity that qualifies for deduction, as computed under the other provisions of the Act. The expression used in section 80P(2)(a), namely the whole of the amount of profits and gains attributable to any one or more such activities, was treated as indicating that the profit from one eligible activity cannot be reduced by a loss from another eligible activity. The object of the provision was also noted to be the promotion of the co-operative sector by granting full relief on the profits of the qualifying activity.

Conclusion: The deduction under section 80P(2)(a) was rightly allowed on the profit from the eligible activity without adjusting the loss from another eligible activity, and the answer was in favour of the assessee.

Ratio Decidendi: For deduction under section 80P(2)(a), each eligible source of income must be computed separately on its own profits, and losses from another qualifying activity cannot be set off to reduce the deduction.

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