Industrial undertaking-wise deduction under Section 80IB cannot be denied by clubbing investments of a separate unclaimed unit.

Deduction under Section 80IB is available with reference to the industrial undertaking, not the proprietor as such, so each industrial unit must be tested independently against the statutory conditions. Where an assessee operates more than one separately located unit, the investment in a unit not claimed for the benefit cannot be clubbed with the eligible unit to defeat the monetary limit under Section 80IB(3)(ii). The scheme of Section 80IA(5) supports treating the qualifying unit as an independent source of income for computation. On that basis, the first unit had to be examined separately and remained eligible for deduction.

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Issues: Whether, for the purpose of deduction under Section 80IB(3)(ii), the investment in two separately located industrial units owned by the same proprietor was required to be clubbed, or whether the eligibility had to be examined unit-wise with reference to the relevant industrial undertaking alone.

Analysis: Deduction under Section 80IB is allowable in respect of an industrial undertaking and not in respect of the individual assessee as such. Where an assessee has more than one industrial unit, each undertaking is to be tested separately against the statutory conditions. On the facts, the second unit was not claimed for the relevant benefit, and therefore its plant and machinery value could not be added to the investment in the first unit for deciding whether the first unit exceeded the monetary limit. The scheme of Section 80IA(5), as relied upon, supports treating the eligible unit as an independent source of income for the purpose of computation.

Conclusion: The investment in the two units was not liable to be clubbed, and the first unit had to be assessed separately for eligibility under Section 80IB(3)(ii). The deduction was rightly allowed in favour of the assessee.

Ratio Decidendi: For deduction under Section 80IB, the eligibility of each industrial undertaking must be determined independently, and the investment in a separate unit not claimed for the benefit cannot be aggregated to disqualify the eligible unit.

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