Judgment :- N.V. BALASUBRAMANIAN, J. At the instance of the Revenue, the Tribunal, referred the following two questions of law under s. 256(1) of the IT Act (hereinafter referred to as "the Act") for our consideration (1) "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was entitled to the deduction under s. 80HH in respect of the profit earned by the three profit-making units without setting off the losses sustained by the other three units ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the amount of subsidy received from SIPCOT should not be reduced from the actual cost of assets for the purpose of allowing depreciation, investment allowance and relief under s. 80J ?" The assessment year involved in 1981-82. The assessee is engaged in the manufacture of safety matches and other allied products. The assessee claimed relief under s. 80HH of the Act in respect of the profits earned by three units without setting off the assessee's loss sustained by the other two units. The Tribunal held that the assessee is entitled to deduction of the losses from other units. Recently in the assessee's own case for an earlier assessment year in an unreported judgment in T.C. Nos. 498 of 1983 and 444 of 1986, by our judgment dt. 25th February, 1998, [reported as CIT vs. Macmillan Co. of India Ltd. we have held that the losses should be set off against the profits of the industrial undertaking before granting the deduction under s. 80HH of the Act, in view of the specific provision found in s. 80AB of the Act. In view of the said decision, the Tribunal was not correct in holding that the losses should not set off and accordingly we answer the first question of law referred to us in the negative and in favour of the RevenueInsofar as the second question is concerned, it is fairly conceded by the learned counsel for the Revenue that the issue raised in the question is covered against the Department by the decision of the Supreme Court in Associated Stone Industries Ltd. vs. CIT [Sic-this should be CIT vs. P.J. Chemicals Ltd. etc. etc., wherein the Supreme Court held that the amount of subsidy received by the assessee is not deductible from the actual cost of the assets under s. 43(1) of the Act for the purpose of calculation of the depreciation. Following the decision of the Supreme Court, the second question of law referred to us is answered in the affirmative and against the Revenue. However, in the circumstances of the case, there will be no order as to costs.