Eligible business deduction under Section 80IA is computed on business profits, not capped by lower aggregate income.

Section 80IA deduction is to be computed on the profits of the eligible business alone, with the eligible undertaking treated as the relevant source of income for that purpose. Section 80AB does not permit substitution of the assessee's lower aggregate income from all sources, nor can it be used to cap the statutory deduction by reference to gross total income where the claim falls within that limit. The commentary records that the Revenue's challenge failed and that no substantial question of law arose for interference, leaving the appellate view on entitlement confirmed.

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Issues: Whether deduction under Section 80IA of the Income-tax Act, 1961 was to be computed on the profits of the eligible business undertaking alone, or whether Section 80AB required the deduction to be restricted with reference to the lower gross total income from all sources.

Analysis: Section 80IA provides that the eligible business is to be treated as the only source of income for determining the deduction, and in the case of a company the permissible deduction is thirty per cent of the profits of such business. Section 80AB deals with the mode of computation of deductions under Chapter VIA, but it does not authorise substitution of the total income from all sources for the profits of the eligible business, nor does it permit restriction of the deduction to the lower figure merely because the overall income is less than the business profit. The deduction claimed by the assessee was within the gross total income, and the provision could not be read to curtail the statutory percentage deduction from eligible business profits.

Conclusion: The deduction under Section 80IA had to be worked out on the profits of the eligible business, not on the lower total income figure from all sources; the assessee's claim was and the Revenue's challenge failed.

Final Conclusion: No substantial question of law arose for interference, and the assessee's entitlement to deduction as upheld by the appellate authorities stood confirmed.

Ratio Decidendi: Where Section 80IA specifically mandates computation of deduction on the profits of the eligible business, Section 80AB cannot be invoked to substitute or cap that deduction by reference to the assessee's lower aggregate income from all sources.

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