Industry-wise deduction under section 80E: losses from one priority industry cannot reduce profits of another eligible industry.

Section 80E relief was to be computed industry-wise, with the deduction linked to the profits and gains of the particular priority industry whose income was under consideration. Losses from another priority industry carried on by the same assessee could not be imported to reduce those profits, because the provision operated only on the eligible industry itself unless the adjustment related to that very industry. Accordingly, the loss from the alloy steel industry could not be set off against the profits of the automobile ancillaries industry for section 80E purposes, and the answer was in favour of the assessee.

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Issues: Whether, in computing the deduction under section 80E of the Income-tax Act, 1961, the loss incurred in one priority industry could be set off against the profits of another priority industry owned by the same assessee.

Analysis: Section 80E granted a deduction with reference to the profits and gains of the particular priority industry whose income was being considered. The provision was intended to encourage the setting up and efficient working of specified industries, and its benefit was to be worked out industry-wise. Losses of another industry, even if that other industry also qualified as a priority industry, could not be imported to reduce the profits of the industry claiming relief. The computation had to remain confined to the profits and gains of the eligible industry itself, unless the loss or adjustment related to that very industry.

Conclusion: The loss from the alloy steel industry could not be set off against the profits of the automobile ancillaries industry for purposes of section 80E; the answer was in favour of the assessee.

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