This appeal by Revenue is preferred against Order of CIT(A) mainly on two grounds which are as under: " 1. On facts and in circumstances of case as well as in law, learned CIT(A) has erred in directing AO to allow deduction under s. 80HHC of IT Act while computing book profit and to calculate said deduction on basis of book profit as defined in explanation below s. 115JA(2) although AO had correctly disallowed said deduction from book profit since income computed under normal provisions of said Act was negative figure. On facts and in circumstances of case as well as in law, learned CIT(A) has erred in directing AO to allow deduction under s. 80-IA while computing book profit for purpose of s. 115JA of said Act although AO was right in not granting deduction under s. 80HHC since income returned was loss return under normal provisions of IT Act. appellant prays that Order of CIT(A) on above grounds be set aside and that of ITO/AC/DC be restored. appellant craves leave to amend or alter any grounds or add new ground which may be necessary." With regard to ground No. 1 our attention was invited by learned counsel for assessee that this issue is covered by order of Special Bench in case of Dy. CIT vs. Syncome Formulations (I) Ltd. (ITA No. 2711/Mum/2003) in which it has been held that deduction under s. 80HHC in MAT Scheme from taxable income which is otherwise adjusted book profit and deduction under s. 80HHC should be computed on adjusted book profit. Copy of Order of Tribunal is placed on record. learned Departmental Representative on other hand has invited o u r attention to order of CIT(A) in which he has directed AO to calculate deduction under s. 80HHC on basis of book profit as defined in explanation below s. 115JA(2) of Act for its reduction from net profit for computing book profit under s. 115JA(2) of Act. Whereas, Special Bench of Tribunal has held that deduction under s. 80HHC should be computed on adjusted book profit. words adjusted book profit has not been defined either under s. 115JA or anywhere in Act. Moreover, words adjusted book profit has not been explained even in Order of Tribunal by Special Bench. learned Departmental Representative further invited our attention to explanation below sub-s. (2) of s. 115JA with submissions that under explanation words book profit has been defined and according to it, book profit means, net profit as shown in profit and loss account for relevant previous year prepared under sub-s. (2) of s. 115JA as increased by amount mentioned in its clauses to f , if it is debited to P&L a/c and as reduced by amount prescribed/computed under cl. (?) to cl. (ix). According to cl. (viii) of Explanation, amounts of profit eligible for deduction under s. 80HHC computed under cl. (a), (b) or (c) of sub-s. (3) or sub- s. (3A), is required to be reduced from aforesaid net profit in order to compute book profit for purpose of s. 115JA of Act. Meaning thereby, before computing book profit one is required to compute amount of profit eligible for deduction under s. 80HHC as per cl. (viii). CIT(A) has given direction to AO to compute deduction under s. 80HHC on basis of book profit which cannot be worked out without reducing profits eligible for deduction under s. 80HHC as per cl. (viii) from net profit. learned Departmental Representative further contended that figure of book profit can only be computed after reduction of amount of profit eligible for deduction under s. 80HHC as per cl. (viii) from net profit shown in P&L a/c prepared as per sub-s. (2) of s. 115JA. Without doing this exercise, book profit cannot be computed and when book profit has not been computed, how deduction under s. 80HHC can be computed on basis of book profit, as directed by CIT(A). learned Departmental Representative further contended that Special Bench of Tribunal has not explained in its order as to what would be adjusted book profit. Whether it is book profit mentioned in explanation below sub-s. (2) of s. 115JA or it is something else. If it is something else, how it is to be computed. These queries remain unanswered in Order of Special Bench. Having carefully examined issue in dispute, Order of lower authorities and Order of Special Bench of Tribunal, we find that Tribunal has adjusted issue in detail and has finally held that deduction under s. 80HHC should be computed on adjusted book profit. relevant observation of Tribunal in its para 6.6 is extracted hereunder for sake of reference: "The deduction under s. 80HHC in MAT scheme is from taxable income, which is otherwise adjusted book profit. If no deduction is available to assessee, gross total income itself is taxable income of assessee. MAT scheme does not provide for deductions. Therefore, interpretation is that adjusted book profit of company itself is gross total income of that assessee-company. deduction under s. 80HHC is in that way given out of gross total income in case falling under MAT. This in turn means that section 80HHC should be computed on adjusted book profit. Sec. 115J, 115JA and 115JB came into operation, as regular profits has been substituted by book profit. Once substitution is over, there is no way to go back to normal computation process of statutory profit, which has already been overwhelmed by ss. 115J, 115JA and 115JB. This reconciles alleged incompatibility pointed out by Revenue that deduction available to assessee under Chapter VI-A is subject to s. 80AB. Therefore, we find that deduction under s. 80HHC in case of MAT assessment is to be worked out on basis of adjusted book profit and not on basis of profit computed under regular provisions of law applicable to computation of profit and gains of business or profession." We have also considered arguments of learned Departmental Representative and we find force therein. CIT(A) has directed AO to compute deduction under s. 80HHC on basis of book profit as defined in Explanation below s. 115JA(2) of Act. In Explanation below sub-s. (2) of s. 115JA, words book profit has been defined and according to this Explanation, book profit means net profit as shown in P&L a/c for relevant previous year in accordance with provisions of parts II and III of Sch. VI of Companies Act as increased by amount specified in cls. (a) to (f), if it is debited to P&L a/c and as reduced by amount computed under cls. (i) to (ix). From plain interpretation of Explanation, only one inference is drawn to (ix). From plain interpretation of Explanation, only one inference is drawn that for computing book profit, net profit is to be reduced by amount computed under cls. (i) to (ix). Clause (viii) deals with profits eligible for deduction under s. 80HHC. From plain reading of this Explanation, amount of profit eligible for deduction under s. 80HHC as per cl. (viii) is required to be reduced from aforesaid net profit in order to compute book profit. Meaning thereby, first of all profits eligible for deduction under s. 80HHC are to be computed and thereafter, it be reduced from net profit in order to compute book profit, for purpose of s. 115 JA of Act. Where figure of book profit has not been worked out, how it can be formed to be basis for computing profit eligible for deduction under s. 80HHC of Act. In light of these facts, we do not find any justification in direction of CIT(A).We accordingly set aside same. This issue was examined by Special Bench of Tribunal in case of Dy. CIT vs. Syncome Formulations (I) Ltd. (ITA No. 2711/Mum/2003) in which they have held that deduction under s. 80HHC is to be computed on basis of adjusted book profit. According to order of Special Bench deduction under s. 80HHC are to be computed on basis of adjusted book profit. Since order is passed by larger Bench, we are bound by it and We, therefore, following said order, restore matter to file of AO with direction to compute deduction under s. 80HHC on basis of adjusted book profit and also to compute book profit for purpose of s. 115JA in light of order of Special Bench of Tribunal in case of Dy. CIT vs. Syncome Formulations (I) Ltd. (ITA No. 2711/Mum/2003). With regard to ground No. 2 it is noticed that AO has not allowed deduction under s. 80-IA while computing book profits for purpose of s. 115JA of Act, on ground that it was not claimed in return of income, as it was declared at loss. AO has also held that since there is returned loss during year, no deduction under Chapter VI-A is available to assessee and for same reasons, no deduction under s. 80-IA is allowable for computing book profit under s. 115JA of Act. assessee preferred appeal before CIT(A) and CIT(A) directed AO to allow deduction under s. 80-IA while computing book profit for purpose of s. 115JA of Act, after having observed that assessee s industrial undertaking was situated in backward State in VIIIth Schedule to IT Act and is eligible for deduction under s. 80-IA. AO had disallowed claim of deduction under s. 80-IB, but, CIT(A) directed AO to allow deduction under s. 80-IA. Since assessment year involved is 2000-01 and by that time, original s. 80-IA was substituted by ss. 80-IA and 80-IB and assessee claim pertains to s. 80-IB, so CIT(A) inadvertently used word 80-IA in place of s. 80-IB. Now Revenue is in appeal before Tribunal and has invited our attention that as per s. 115JA net profit computed as per its sub-s. (2) is to be reduced by amounts of profit of industrial undertaking located in industrial backward State or district as referred to in sub-s. (4) and sub-s. (5) of s. 80-IB, for assessment year such industrial undertaking is eligible to claim deduction of 100 per cent of profits and gains under sub-s. (4) or sub-s. (5) of s. 80-IB. What is required is to be reduced from net profit in order to compute book profit, is only amounts of profit derived by industrial undertaking and not profits eligible for deduction under s. 80-IB. profits eligible for deduction under s. 80-IB are profits from business of industrial undertaking and not profits derived from industrial undertaking. learned Departmental Representative further contended that word derived has already been defined by apex Court in case of CIT vs. Sterling Foods (1999) 153 CTR (SC) 439: (1999) 237 ITR 579 (SC) and Pandian Chemicals Ltd. vs. CIT(2003) 183 CTR (SC) 99: (2003) 262 ITR 278 (SC) and by various High Courts through different judgments. profits derived from industrial undertaking may be different than profit eligible for deduction under s. 80-IB, as such, direction of CIT(A) is not in accordance with provisions of law. learned Departmental Representative has also contended that order of Special Bench of Tribunal in case of Dy. CIT vs. Syncome Formulations (I) Ltd. (ITA No. 2711/Mum/2003), cannot be applied here as it was rendered in respect of deduction under s. 80HHC. learned counsel for assessee on other hand has contended that this issue is also covered by order of Special Bench of Tribunal i n case of Dy. CIT vs. Syncome Formulations (I) Ltd. (ITA No. 2711/Mum/2003). We have carefully examined orders of lower authorities and order of Special Bench in case of Dy. CIT vs. Syncome Formulations (I) Ltd. (ITA No. 2711/Mum/2003). controversy raised before us is, with regard to computation of book profit under s. 115JA in order to decide what would be total income of assessee under MAT scheme. book profit is defined in Explanation and according to it, book profit means net profit as shown in P&L a/c for relevant previous year prepared in accordance with provisions of part II and part III of Sch. VI of Companies Act, 1956, as increased by amount described in cls. to f if any amount referred therein is debited to P&L a/c and as reduced by amount computed in cls. (i) to (ix). According to cl. (v) aforesaid net profit is to be reduced by amount of profit derived by industrial undertaking located in industrial backward State district as referred to in sub-s. (4) or sub-s. (5) of s. 80-IB for assessment years such industrial undertaking is eligible to claim deduction of 100 per cent of profits and gains under sub-ss. (4) or (5) of s. 80-IB. amount which is required to be reduced from aforesaid net profit in order to compute book profit for purpose of s. 115JA is only amounts of profit derived by industrial undertaking, which is eligible for 100 per cent deduction under s. 80-IB of Act It is, nowhere mentioned under this clause that profits derived by industrial undertaking must be profit eligible for deduction under s. 80-IB of IT Act. While allowing deduction under s. 80-IB of Act one has to examine gross total income of industrial undertaking and eligible deduction shall not exceed gross total income of assessee. But, for purpose of s. 115JA, amount which is required to be reduced from net profit, is profits derived from industrial undertaking, which is eligible for 100 per cent deduction under s. 80-IB. necessary conditions which is required to be seen is only whether industrial undertaking is eligible for 100 per cent deduction under s. 80-IB. In order to determine i profits derived from industrial undertaking, one has to examine definition of word derived in light of various judicial pronouncements in cases of CIT vs. Sterling Foods (supra), Pandian Chemicals Ltd. vs. CIT (supra) and other judgments on this subject. We have also examined contention of assessee that adjusted book profit should be profit derived from industrial undertaking and is eligible for 100 per cent deduction under s. 80-IB, but, we are not inclined to accept this argument of assessee, inasmuch as for computing adjusted book profit, one has to take different aspect under consideration. In fact, words "adjusted book profit" has not been defined either under s. 115JA or anywhere in Act. Under s. 115JA computation of book profit starts from net profit shown in P&L a/c and this net profit may be profits of business of industrial undertaking, but, it cannot be called to be profits derived by industrial undertaking, as it includes profits on receipts from different activities/business of industrial undertaking, which may not be called to be profits derived by industrial undertaking in light of judgment of apex Court in cases of CIT vs. Sterling Foods (supra), Pandian Chemicals Ltd. vs. CIT (supra). orders of Tribunal in case of Dy. CIT vs. Syncome Formulations (I) Ltd. (ITA No. 2711/Mum/2003), has been rendered on point of computation of book profit under s. 115JA vis-a-vis amounts,, of profits eligible for deduction under s. 80HHC as per cl. VIII of Explanation below s. 115JA of Act. As per cl. VIII of Explanation, net profit is to be reduced by amounts of profit eligible for deduction under s. 80HHC computed under cl. (a), (b) or (c) of sub-s. (3) or sub-s. (3A) or as case may be of that section and subject to conditions specified in sub-ss. (4) and (4A) of that section. In that case, amount which is required be reduced from net profit, is amount of profit eligible for deduction under s. 80HHC and not profit derived from export unit like case in cl. (v) in which amounts required to be reduced is profits derived by industrial undertaking. It has been repeatedly held that s. 80HHC is complete code and for computing deduction under s. 80HHC, different formula is laid down. To start with computation under s. 80HHC, one has to find out, what would be profits of business. profits of business was defined in Expln. (baa) below sub-s. (4B) of s. 80HHC of Act. profits of business means profits of business as computed under head "Profits and gains of business or profession" as reduced by amount specified in cls. (1) and (2). moot question arose in case of Syncome Formations (I) Ltd. (supra) is that what would be profits of business, to start with for computation of deduction under s. 80HHC. Whether it would be profits of business computed under head Profits and gains of business or profession as per provisions of Act or it would be adjusted book profit worked out as per s. 115JA. Having deliberated on this issue, Special Bench of Tribunal in case of Dy. CIT vs. Syncome Formutions (I) Ltd. (ITA No. 2711/Mum/2003), has categorically held that deduction under s. 80HHC in MAT scheme is from taxable income which is otherwise adjusted book profit. Tribunal further held that this in turn, means that s. 80HHC should be computed on adjusted book profit. relevant observation of Tribunal in this regard is extracted hereunder for sake of reference: "The deduction under s. 80HHC in MAT scheme is from taxable income, which is otherwise adjusted book profit. If no deduction is available to assessee, gross total income itself is taxable income of assessee. MAT scheme does not provide for deductions. Therefore, interpretation is that adjusted book profit of company itself is gross total income of that assessee company. deduction under s. 80HHC is in that way given out of gross total income in case falling under MAT. This in turn means that s. 80HHC should be computed on adjusted book profit. Secs. 115J, 115JA and 115JB came into operation, as regular profits has been substituted by book profit. Once substitution is over, there is no way to go back to normal computation process of statutory profit, which has already been overwhelmed by ss. 115 J, 115 JA and 115 JB. This reconciles alleged incompatibility pointed out by Revenue that deduction available to assessee under Chapter VI-A is subject to s. 80AB. Therefore, we find that deduction under s. 80HHC in case of MAT assessment is to be worked out on basis of adjusted book profit and not on basis of profit computed under regular provisions of law applicable to computation of profits and gains of business or profession." But, in case of computation of book profit vis-a-vis profits derived by industrial undertaking which is eligible for deduction under s. 80-IB, eligible profit for deduction under s. 80-IB is not required to be computed as per eligible profit for deduction under s. 80-IB is not required to be computed as per cl. (v) of Explanation. net profit is required to be reduced by amount of profits derived by industrial undertaking which is eligible for 100 per cent deduction under s. 80-IB of IT Act. It is not necessary whether profits derived by industrial undertaking, is eligible for deduction in terms of other conditions of s. 80-IB. In order to understand real meaning of language used in cl. (v), we extract same as under: "(v) amount of profits derived by industrial undertaking located in industrially backward State or district as referred to in sub-s. (4) and sub-s. (5) of s. 80-IB, for assessment years such industrial undertaking is eligible to claim deduction of hundred per cent of profits and gains under sub-s. (4) or sub- s. (5) of s. 80-IB." language used in this sub-clause is quite unambiguous and clear to explain that it means amount required to be reduced is profits derived from industrial undertaking which is eligible for 100 per cent deduction under s. 80-IB and not profit eligible for deduction. In light of these facts we are of view that ratio laid down in case of Syncome Formations (I) Ltd. (supra), cannot be applied in present case. Having examined order of lower authorities we find that none of authorities has examined issue in proper perspective. They have simply examined whether industrial undertaking is independently eligible for deduction under s. 80-IB or not Whereas, this factor was not required to be examined at all. lower authorities have disallowed claim of assessee having realized that under s. 80-IB, assessee is not eligible for deduction of Act. Since issue was not properly examined and profits derived from industrial undertaking, is not computed for its reduction from net profit as shown in P&L a/c prepared under sub-s. (2) of s. 115JA, book profit under s. 115JA, cannot be properly computed. We, therefore, are of view that matter should go back to file of AO for calculation of amounts of profit derived by industrial undertaking in light of judgment of apex Court in cases of Pandian Chemicals Ltd. (supra) and Sterling Foods (supra) and thereafter to compute book profit for purpose of s. 115JA of Act. AO shall also examine as to whether assessee industrial undertaking is eligible for 100 per cent deduction under s. 80-IB of Act inasmuch as cl. (v) of Explanation to s. 115JA will come in operation when assessee is entitled for 100 per cent deduction under s. 80- IB of Act. Accordingly, order of CIT(A) is set aside and matter is restored to file of AO for recomputation of book profit and total income of assessee in terms indicated above after affording opportunity of being heard. In result, appeal of Revenue is allowed for statistical purposes. *** ASSISTANT COMMISSIONER OF INCOME TAX v. GODREJ INDUSTRIES LTD.