Varsha (P) Ltd., Bhopal has 2 centres viz. Unit A at Jabalpur and Unit B at Indore. Unit A is eligible for deduction under section 80-IB of the Income-tax Act. During the financial year 2023-24, the company earned a net

Quantum of deduction U/S 80-IB for an industrial undertaking As per section 80AB, where the GTI includes any income of nature specified under the heading C, like section 80-IB, then, notwithstanding anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accordance with the provisions of the Act (before making any deduction under this Chapter) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is included in his gross total income. Section 80A(2) provides that the aggregate amount of the deduction under Chapter VI-A, shall not exceed the "gross total income" of the assessee. The section 80-IB of the Income Tax Act states that the "total income" of an assessee is computed by taking into account the allowable deduction in respect of the profits and gains derived from the "eligible business" as the "only source of income". For the purpose of calculating profit-linked deduction under any section of Chapter VI-A, loss sustained in other division or units cannot be taken into account, as only profits from the eligible business have to be taken into account. The deduction u/s 80-IB is undertaking-specific and is granted with reference to the impugned undertaking only. It cannot be reduced by loss, if any, from any other undertaking. Conclusion The deduction U/S 80-IB for the Jabalpur unit has to be allowed with regard to its income (₹83 lakh) only, and not with reference to the overall business income. Thus, the action of the Assessing Officer is not tenable in law.