This is appeal filed by Revenue against order of CIT(A)-XIV, New Delhi, in appeal No. 725/01-02, dt. 11th March, 2002 whereby Revenue has taken two grounds of appeal, namely, deduction allowed under s. 80-IA and deduction allowed under s. 80HHC to assessee. In first ground of appeal, Revenue has objected to order of CIT(A) allowing deduction under s. 80-IA at Rs. 97,97,898 as against Rs. 31,01,627 restricted by AO. brief facts of case are that assessee is company engaged in business of manufacture and sale of medical disposals like cannula, blood bags, I.V., etc. It has got various units. Out of total 7 units, 5 units are engaged in manufacturing activity whereas remaining 2 units in head office are in respect of share business and other business. assessee- company has been maintaining separate accounts and computing its profit and loss of each of its units separately and computing deduction under s. 80-IA in respect of each of units independently as per provisions of Act. For t h e assessment year under consideration, assessee filed its IT return claiming deduction under s. 80-IA. Since there was profit of Rs. 4,59,10,915 in unit 196, deduction of Rs. 1,37,73,275 was claimed being 30 per cent of Rs. 4,59,10,915. AO, however, while completing assessment restricted this claim to Rs. 39,01,627. basis for doing this was that unit 196, unit 205 and unit 206 are one and same and as such aggregate of profit and loss of these units have to be considered, not merely profit of unit 196 only. AO has further held that entire head office expenditure are to be allocated, not only 90 per cent as done by assessee and in process, he allocated remaining 10 per cent of head office expenditure to these three units only, not to all units and accordingly, he deducted these expenditure from aggregate profit and loss of these three units while computing deduction under s. 80-IA. Not only that, AO further held that brought forward losses in respect of head office are also to be adjusted against profit and loss of these three units. Based on above reasoning, AO computed net profit of these three units (taking all as one) at Rs. 1,30,05,424 and allowed deduction at rate of 30 per cent on this to extent of Rs. 39,01,627. assessee filed appeal against above order before CIT(A) contending that each unit is independent of other and AO was not justified in clubbing profit and loss of three units, namely, units 196, 205 and 206. It was further contended that brought forward losses of each unit have to be adjusted against income of that unit only and it cannot be adjusted in aggregate in view of determination of loss of each of units individually in assessment of assessee in earlier years. Further, AO was not justified in allocating head office expenditure to these 3 units ignoring fact that out of total expenditure of head office, 90 per cent of expenditure have already been allocated proportionately to each of units and balance 10 per cent of expenditure is in respect of activities carried out by head office on its own which has nothing to do with working of units. CIT(A) partly accepted contention of assessee. He held that AO was justified so far in clubbing profit and loss of units 196 and 205 as these were engaged in same activities but was not justified in clubbing profit and loss of unit 206 which is independent unit and activity of that unit is different from activities of units 196 and 205. CIT(A) further held that brought forward losses of head office determined in earlier years cannot be adjusted against current year s income of units 196 and 205 as in all earlier years to which these brought forward losses pertain there were profit in one unit and loss in other units and also all units are treated as separate industrial undertakings for computation of s. 80-IA deduction. CIT(A) on issue of allocation of head office expenditure held that AO was not justified in allocating remaining 10 per cent of expenditure to 3 units only. These expenditure have to be allocated to all units in way 90 per cent of expenditure have been allocated by assessee. On basis of above reasoning, CIT(A) recomputed deduction under s. 80-IA at Rs. 97,97,898 as against Rs. 39,01,627 computed b y AO. It is against these findings of CIT(A) that Revenue is in appeal. learned Departmental Representative has contended that CIT(A) was not justified in holding that unit 206 is independent unit. order passed by learned CIT(A) is non-speaking order and no reason has been given why unit 206 should be treated as independent unit. He further contended that in assessment order, AO has given valid reasons for clubbing income of all 3 units. GP rate of one unit is much lower as compared to GP rate of other units. Further, there is common finished goods register, which is being maintained by assessee, and as such activities of these units are one and same and they are also located in same locality. Further, unit 206 is selling only dies and moulds to other production units and as such cannot b e treated as independent unit. learned Departmental Representative also contended that CIT(A) was not justified in holding that head office expenditure have to be allocated proportionately to all units and there is no basis why CIT(A) has held so. Opposing contention of Departmental Representative, learned Authorised Representative has argued that arguments advanced by learned Departmental Representative are de hors material. It was submitted that assessee-company has been filing its return regularly for last many years and along with return of income every year unit-wise account of profit and loss is being submitted and deduction under s. 80-IA is being computed and allowed unit-wise. learned Authorised Representative invited attention to computation of income and statement of account filed for preceding years whereby separate computation has been made for each of units. He also invited attention to assessment order for asst. yr. 1996-97, dt. 14th March, 2000, passed under s. 143(3) of Act whereby AO has also accepted unit-wise account. It was submitted that there is no change in working of any of units during year. What was being done and manufactured by each unit in year 1995 continues to be done in year under consideration. It was further submitted that each of units is working independently. Attention was invited to assessment order where AO has himself stated that these units are located differently and not in same premises. Unit 196 means unit at plot No. 196 while unit No. 205 means unit at plot No. 205. Each of units is having independent premises, independent production facility. It was further contended that separate books of account are being maintained for each of units and profit and loss are being computed individually for each of units. As regards AO s observation in assessment order that GP rate for one of units is very much lower as compared to GP rate of other units, reason for same was export order where margin of profit was higher. AO has nowhere controverted this explanation. Further, AO despite making this observation has accepted books of account. He has not rejected books of account, meaning thereby that results declared as per books of account have been accepted and no adverse inference can be drawn against assessee on this pretext. As regards transfer of raw materials sometimes from one unit to another, it was submitted that this fact has been duly explained to AO and was also explained to CIT(A). In case of shortage of material in unit, raw material of other unit used to be transferred sometimes but transfer was need based and always at cost price which did not affect profit or loss of one unit or other. It was just like instead of purchasing from market, same was procured from other unit at same cost at which it was bought by that unit. This was merely facilitation explained before AO. There was absolutely no diversion of profit from one unit to another. On contrary, these transfer entries in books of account confirm fact that separate accounts are being maintained and each transaction is being properly documented and there is no mixing up between one unit and another. Had there been mixing up, these transfer entries would not have been there. This point also gets strengthened by fact that in past, Department has accepted each unit independently. Further, AO except stating that there is transfer of raw material, has not given any adverse feature or reason for doubting genuineness of transaction. As regards issue that units 196 and 205 are engaged in similar activities and unit 206 is making tools and dies, which are being used in unit 196 and unit 205, it was submitted that as per provisions of s. 80-IA, deduction under this section is available in respect of each undertaking individually and profit and gain of undertaking has to be computed separately. Not only that, there can be many undertakings in same line of business, manufacturing same items. However, deduction under this section has to be computed for each of units separately and not on aggregate basis as has been done by AO. For this purpose, attention was invited to sub-s. (5) of s. 80-IA which reads as under: "(5) Notwithstanding anything contained in any other provision of this Act, profits and gains of eligible business to which provisions of sub-s. (1) apply shall, for purposes of determining quantum of deduction under that sub-section for assessment year immediately succeeding initial assessment year or any subsequent assessment year, be computed as if such eligible business were only source of income of assessee during previous year relevant to initial assessment year and to every subsequent assessment year upto and including assessment year for which determination is to be made." As per above section, deduction has to be computed considering unit as only unit and there cannot be any adjustment on account of profit or loss of other units. It has been further argued that merely because units 196 and 205 are manufacturing same item cannot be ground for clubbing and so will be case of unit 206. As per provisions of s. 80-IA, deduction is for new undertaking and as such, as and when new undertaking is set up by assessee, income of that undertaking will be eligible for deduction under this section. profit/loss of other undertaking cannot be adjusted or clubbed against income of this new undertaking on ground that new undertaking i s manufacturing same goods or items, which are being done by other units. deduction under this section is undertaking specific. On basis of above explanation, it was contended that what was submitted before AO for claiming deduction under s. 80-IA was correct though CIT(A) has held that units 196 and 205 need to be clubbed and unit 206 need not be clubbed. Since assessee has not filed appeal against said order in view of nil impact being there on tax liability, still on merit, action of CIT(A) even in clubbing of two units, i.e., 196 and 205 is against provisions of law as explained above. Further, CIT(A) has given valid reasons for holding that unit 206 is independent unit. It was argued by learned Authorised Representative that contention of learned Departmental Representative Representative that contention of learned Departmental Representative that CIT(A) has not given reasons for treating unit 206 as separate unit is wrong as CIT(A) in para 5 on p. 4 of order has given categorical finding to effect that unit 206 is engaged in activity which is entirely different from activities of units 196 and 205. It has been further held in that order that unit 206 is tool room and engaged in manufacture of dies and tools which are not only consumed by all units of assessee-company but are also sold to outside parties in earlier as well as subsequent years. As such, it has been argued that no fault on this point can be found in order of CIT(A). On issue of allocation of head office expenditure, learned Authorised Representative stated that assessee-company has already allocated 90 per cent of expenditure to all units proportionately. balance 10 per cent of expenditure were not allocated since head office is working independently and carrying on activities on its own, other than for various units and as such total expenditure incurred by head office cannot be considered to have been incurred for units. Despite these facts, CIT(A) has held that balance 10 per cent of expenditure also needs to be allocated. Though CIT(A) is not correct in doing so as stated above, still assessee did not contend same in appeal as there was no impact on tax liability. only correction which CIT(A) applied is that he corrected wrong allocation done by AO to three units, i.e., 196, 205 and 206 and has held that allocation should be done for all units including unit No. 292 which is also working independently, exactly in manner, remaining 90 per cent of expenditure have already been allocated by assessee-company itself. As such, CIT(A) has given relief on this point by correcting allocation formula wrongly applied by AO and learned Departmental Representative in his argument has not been able to point out what is wrong in allocating balance 10 per cent of expenditure also to all units and why other units should be ignored which has been done by AO, and more so when AO himself has accepted allocation of 90 per cent expenditure done by assessee. As regards setting off brought forward losses, learned Authorised Representative has pointed out that CIT(A) in para 3 on p. 4 has given categorical finding that there is no reason to allocate brought forward losses of head office as in all earlier years there were profits in one unit and loss in other units and also all units were treated as separate industrial undertakings for computation of deduction under s. 80-IA. CIT(A) has further held that even if at all brought forward losses of HO (Others) is to be allocated, it should be allocated to all units in earlier years to which it pertains to and not in year under appeal. In his argument, learned Departmental Representative could not point out any mistake in reasoning given by CIT(A) in his order and as such on this reasoning itself action of CIT(A) is justified. On merit also each unit has to be treated under provisions of s. 80-IA(5) as independent unit as if such unit were only source of income of assessee during relevant previous year. If that be so, then profit and loss of other units under no circumstances can be allocated to other units and that too in subsequent year. On basis of above reasoning, learned Authorised Representative supported order of CIT(A). We have considered arguments advanced by Revenue as well as t h e assessee-company. Admittedly, in this case, assessee-company is having various undertakings and has been maintaining separate accounts. Each of units profit and loss are being determined separately and there is no dispute regarding eligibility of its claim under s. 80-IA. dispute is regarding computation of claim. AO has allowed claim at Rs. 39,01,627 as against claim of Rs. 1,37,73,275 made by assessee-company. AO on basis of reasoning given in assessment order that units 196, 205 and 206 are situated in same locality and some of material has been transferred from one unit to another, there is variation in GP rate and there is common finished goods register, has held that profit and loss of these units need to be clubbed together for computing deduction under s. 80-IA. However, we are unable to accept contention of AO. As explained by learned Authorised Representative in his arguments stated hereinabove, above reasoning of AO is against provisions of law. As per provisions of s. 80-IA, deduction is available with respect to undertaking, which is eligible under provisions of that section. There can be different undertakings with one assessee, as is case with assessee- different undertakings with one assessee, as is case with assessee- company. There is possibility that different undertakings may start operation at different point of time though they may be engaged in same business. There is no such restriction that two undertakings manufacturing same type of product will be considered as one undertaking. There are conditions specified in sub-s. (2) of s. 80-IA for undertaking to be eligible to claim deduction. As per this sub-section, all that is required is that undertaking should be new undertaking having new plant and machinery. It nowhere puts condition that it should manufacture new product or goods other than what is being manufactured or produced by assessee in any other undertakings. Thus, reasoning of AO that units 196 and 205 are one and same and accepted by CIT(A) for units 196 and 205 is not correct. There is nothing to justify, in view of express provisions of Act, to hold that units 196, 205 and 206 need to be clubbed for computing deduction under s. 80-IA. Accordingly, so long undertaking fulfils requirement of these provisions, deduction under s. 80-IA cannot be denied or reduced by adjusting loss of other undertakings. As regards computation of deduction under sub-s. (7) of s. 80-IA, as it was at that point of time for assessment year under consideration, it has been provided that: "Notwithstanding anything contained in any provisions of Act, profits and gains of eligible business to which provisions of this section apply for purpose of determining quantum of deduction shall be as if such undertaking were only source of income of assessee during relevant assessment year". Thus, above provisions treat each undertaking as independent undertaking and nowhere it has been provided that profit or loss of other undertaking is to be merged or aggregated. In this case it is clear that these undertakings are located in different premises, being Nos. 196, 205 and 206. plant and machinery are also independent and there is no allegation in assessment order that in these undertakings there is mixing up of machinery or plant. This is important because as per sub-s. (2) of this section for claiming exemption as industrial undertaking one has to fulfil condition that undertaking has not been formed by transfer to new business of machinery or plant previously used for any purpose. In view of this fact, it cannot be held that these undertakings are not independent undertakings and each of undertakings, i.e., 196, 205 and 206 are independent undertakings. various allegations made by AO in assessment order nowhere disturb this fact of independent undertaking. transfer of raw material from one unit to another by proper entries cannot be held to mean that these two undertakings are common. Similarly, having common finished goods register, cannot be held to mean that these undertakings are not independent. This view gets further supported by then sub-s. (9) and present sub-s. (8) of s. 80-IA whereby it has been provided that when goods are transferred by eligible undertaking to any other business being carried on by same assessee, then value of such goods has to be computed at market value for computing deduction under this section. This clause on contrary authorises transfer of goods of eligible undertaking to another undertaking and accordingly transfer of finished goods by undertaking of assessee to common finished goods register cannot be held to be ground for clubbing income of two units so long profit and loss of each unit has been computed independently. Accordingly, action of AO in clubbing income of all 3 units for computing deduction under s. 80-IA was not justified. deduction under s. 80- IA is to be computed with respect to each unit independently taking into consideration profit of each unit only without clubbing loss of other units. contention of Departmental Representative that CIT(A) was unjustified in treating unit 206 as independent unit cannot be accepted. CIT(A) has given valid reasons for treating unit 206 as independent unit and contention of Departmental Representative that CIT(A) has not given any reasons is also against facts on record. order of CIT(A) is very specific and CIT(A) has given detailed reasoning for same and accordingly we hold that CIT(A) was correct in holding that unit 206 is independent unit. Even otherwise, as stated above, we are of view that there cannot be clubbing of units 196, 205 and 206. contention of Revenue on this point is being rejected. As regards allocation of balance 10 per cent head office expenditure which have been allocated by CIT(A) to all units proportionately instead of allocating only to 3 units as has been done by AO, we are in agreement with argument given by learned Authorised Representative. Though in his arguments learned Authorised Representative has raised issue that allocation of 10 per cent of expenditure need not be made as same pertains to head office activities and has nothing to do with any of units but we are not giving our findings on this issue as assessee is not in appeal. Any allocation of expenditure of head office has to be done to all units which are operating under head office, unless there are v l i d reasons to exclude any particular unit. learned Departmental Representative could not point out any infirmity in formula adopted by CIT(A) and more so when allocation of 90 per cent head office expenditure done by assessee to all units has been accepted by AO as well. As regards adjustment of brought forward losses under head office, CIT(A) has rightly held that there is no reason to allocate these losses of all earlier years when there was profit in one unit and loss in other units and more so when all units were treated as separate industrial undertakings for computation of deduction under s. 80-IA in earlier years. There is another aspect, which we have noticed in this case and for that reason itself this ground of Revenue should fail is that assessee has been filing its return for last many years showing profit and loss of each of units separately. Units 196, 205 and 206, 292, unit GTK (since closed) and unit head office (shares), have been treated separately and profit and loss of each of these units has been accepted in asst. yrs. 1995-96, 1996-97 and 1997-98. No clubbing as resorted by AO in this year has been done in past. activities of each of units continue to be same as in past years. For sake of consistency as well, same should have been accepted. In view of above, ground No. 1 raised by Revenue is rejected. As regards second ground whereby deduction computed under s. 80HHC allowed by CIT(A) is being disputed, learned Departmental Representative has stated that learned CIT(A) was not justified in excluding excise duty from total turnover while computing deduction under s. 80HHC. Moreover, CIT(A) was not justified in excluding loss in share business activity which is independent activity and has nothing to do with export business of assessee while computing deduction under s. 80HHC. learned Departmental Representative has argued that turnover should include excise duty. learned Authorised Representative in his reply has stated that above issues are squarely covered by various judgments of High Courts and this Tribunal in favour of assessee. As regards first issue, it has been stated that there are judgments of at least six High Courts where it has been held that excise duty is to be excluded from total turnover while computing deduction under s. 80HHC. For this, reliance has been placed on following judgments: CIT vs. Sudershan Chemicals & Industries (2000) 163 CTR (Bom) 596: (2000) 245 ITR 769 (Bom) CIT vs. Sundaram Fastners Ltd. (2005) 194 CTR (Mad) 339: (2005) 272 ITR 652 (Mad) CIT vs. Wheels India Ltd. (2005) 197 CTR (Mad) 284: (2005) 275 ITR 319 (Mad) CIT vs. Chloride India Ltd. (2002) 178 CTR (Cal) 432: (2002) 256 ITR 625 (Cal) CIT vs. K. Rajendranathan Nair (2004) 187 CTR (Ker) 201: (2004) 265 ITR 35 (Ker) CIT vs. Bharat Earthmovers Ltd. (2004) 188 CTR (Kar) 488: (2004) 268 ITR 232 (Kar) CIT vs. Wolkmen India Ltd. (2002) 178 CTR (Raj) 301: (2003) 132 TAXMAN 7 (Raj). We have considered arguments of both sides. Since above issue is squarely covered by judgments of various High Courts, we hereby uphold order of CIT(A) on this ground that excise duty is to be excluded from total turnover while computing deduction under s. 80HHC. As regards loss in share business activity, learned Authorised Representative has submitted that assessee has been maintaining separate books of account and share business activity is independent business as profit and loss of that activity cannot be taken into account while computing deduction under s. 80HHC. For this, learned Authorised Representative has placed reliance on following judgments of Delhi Bench of Tribunal where above view has been upheld: Bharat Commerce & Industries Ltd. vs. Dy. CIT, ITA No. 3344/D/2000, dt. 30th Nov., 2004. Bharat Commerce & Industries Ltd. vs. Dy. CIT, MA No. 62/Del/705 in ITA No. 4516/D/99, dt. 5th April, 2005. Bhagwan J. Bahirwani vs. ITO, ITA No. 3772/Del/2001, dt. January, 2005 Virender Kumar Bajaj vs. Asstt. CIT, ITA No. 2690/Del/2004, dt. 2nd Sept., 2005. In view of above issue being squarely covered in favour of assessee by judgments of this Tribunal itself, we uphold action of CIT(A) in excluding loss in share business activity while computing deduction under s. 80HHC of Act. Accordingly, this ground No. 2 of Revenue is rejected. In result, appeal of Revenue is dismissed. *** Deputy Commissioner of Income-tax v. Eastern Medikit Ltd