In this appeal by assessee issue involved is about deduction to be allowed under s. 80-I as well as quantum of deduction that is permissible under Act. plea of assessee was that s. 80-I deduction follows s. 80 HH deduction under Chapter 6A and both these sections emphasised on deduction to be calculated at 20 per cent of profits and gains of undertaking. Department, however, is restricting deduction under s. 80-I at 20 per cent of income arrived at after deduction of amount of relief under s. 80-HH. assessee, therefore, prayed that order of CIT(A) is erroneous on this point of view and that he is entitled to deduction under s. 80-I at 20 per cent on profits and gains. He further pleaded that provision that is contained in s. 80A is only for bringing in issue of allowability of relief to extent of available income. argument of Departmental Representative was that provisions contained in s. 80HH(9) goes to support view of Department that deduction in respect s. 80-I shall be limited to net income after deduction already allowed under s. 80HH. We have given very careful consideration to arguments of parties. t outset we must observe that s. 80HH(1) and s. 80-I(1) lay emphasis on amount to be allowed as deduction in computing total income of assessee from such profits and gains of undertaking of amount equal to 20 per cent thereof. sections do not anywhere mention that deduction to be allowed is 20 per cent of income computed in accordance with provisions of act after relief contained upto Chapter 6A. s. 80HH(9) only provides that when concern is entitled to deduction under s. 80HH, s. 80-I and or s. 80J then first of deduction that would have to be allowed is deduction under s. 80HH. This only is clarification in case of such successive reliefs that relief in respect of earlier section would have to be allowed in full. This is amply made clear by provisions that is contained in s. 80A(2) which provides that aggregate amount of deductions under this Chapter shall not in any case exceed gross total income of assessee. If legislatures intended to give deduction on basis of residual income after providing of relief under each of sections they would have provided clearly in that fashion. section as it stands and as it is worded clearly lays emphasis on calculation of reduction as percentage of profits and gains of undertaking which would mean only commercial profits. Therefore assessee is entitled to relief under s. 80-I to tune of 20 per cent of profits as per its profits & loss account without taking into account depreciation and excluding provision for income-tax as well as investment allowance. ITO is directed to recompute claim in accordance with observations made above. In result, appeal of assessee is allowed. *** DIGCHEM INDUSTRIES v. INCOME TAX OFFICER