JUDGMENT : C.N. Ramachandran Nair, J. In all the connected five appealed filed by the Revenue against the very same assessee, the issue raised is one and the same. Therefore, we heard the appeals together and proceed to dispose of the same by this common judgment. 2. We have heard Senior counsel Sri. P.K.R. Menon for the Revenue and Senior counsel Sri. Joseph Markose appearing for the respondent-assessee. 3. The facts leading to the controversy are the following. The assessee company is engaged in manufacture and sale of rubberised coir products like mattresses, pillows, railway and bus seats. It had four industrial units, one each in the States of Kerala and Andhra Pradesh and two in the State of Tamil Nadu. The assessee made capital investment in research and development in one of the industrial units which entitles it for deduction under Section 35(1)(iv) of the Income Tax Act (hereinafter called "the Act") subject to the ceiling provided under Section 35(2). Similarly one of the industrial units set up by the assessee was a new one and was located in a backward area which entitles the assessee for separate deduction under Section 80HH and Section 80-I of the Act. There is no controversy as to the assessee's eligibility for deduction both under Section 80HH as well as under Section 80-I of the Act in respect of the new industrial unit located in the backward area. Similar is the position with regard to assessee's entitlement for deduction under Section 35(1)(iv) read with Section 35(2) in respect of the capital expenditure incurred for scientific research in one of the industrial units. However, controversy that arises for consideration, which is in a narrow campus, is as to whether deduction under Section 35(1)(iv) read with Section 35(2) has to be allowed first and the other deductions falling under Chapter VI-A namely Section 80HH and Section 80-I should be granted thereafter with reference to net income so obtained after first granting deduction under Section 35(1)(iv) read with Section 35(2) of the Act or whether Chapter VI-A deductions provided under the above two Sections should be granted on the gross total income before making deduction under Section 35(1)(iv) read with Section 35(2) of the Act. Even though the Assessing Officer applied different methods of calculation of eligible relief and he granted relief under all the provisions, the method adopted by him was to follow the sequence of deductions provided in the statute itself i.e. by first granting eligible deduction under Section 35(2) on the capital expenditure in research and development and then from the gross total income so arrived at, he granted eligible deduction under Section 80HH and 80-I in respect of the profit attributable to the industrial unit concerned. However, assessee's case is that assessee is entitled to get deduction under Section 80HH and 80-I before providing for deduction under Section 35(2), which was accepted by the Tribunal, against which Revenue has filed these appeals. 4. Before us Senior counsel appearing for the Revenue relied on the decision of the Supreme Court in Synco Industries Ltd. v. Assessing Officer (Income Tax) and Another reported in 2008 (299) ITR 444 : 2008 KHC 4464 : 2008 (4) SCALE 263 : 2008 (4) SCC 22 and contended that the Tribunal's order is not sustainable by virtue of this decision alone. Counsel for the assessee has referred to the decision of the Supreme Court relied on by the Tribunal in Commissioner of Income Tax v. Canara Workshop (P) Ltd. reported in 1986 (161) ITR 320 : 1986 KHC 852 : 1986 (3) SCC 538 : AIR 1986 SC 1727 : 1986 Tax LR 1133 and decision of the Calcutta High Court in Commissioner of Income Tax v. Balmer Lawrie & Co. Ltd. reported in 215 ITR 249 and submitted that the Tribunal was right in accepting the method of calculation of relief under Section 80HH and Section 80-I claimed by the assessee. Senior counsel appearing for the assessee also contended that the decision of the Supreme Court relied on by the Revenue has no application because unlike in the said decision wherein assessee had carried forward loss, the assessee in this case had no business loss carried forward to be set off against business income. 5. After hearing both sides and after going through the judgment of the Supreme Court, we find that even though the facts are not the same, the principle relied on by the Supreme Court squarely applies to the facts of this case. 5. After hearing both sides and after going through the judgment of the Supreme Court, we find that even though the facts are not the same, the principle relied on by the Supreme Court squarely applies to the facts of this case. The definition of "gross total income" contained in Section 80B(5) extracted herein below itself will prove the scheme or the method of computation to be followed to arrive at the total income by granting deductions under Chapter VI-A including Sections 80HH and 80-I of the Act: ""Gross total income" means the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter." What is made clear above is that before granting any deduction under Chapter VI-A which includes Sections 80HH and 80-I, the gross total income of the assessee has to be determined which is income computed under all heads including business income computed after granting deductions and allowances under Sections 30 to 43D of the Act which includes deduction of capital expenditure on research and development allowable under Section 35(2) of the Act. For easy reference Section 80HH and Section 80-I are extracted hereunder: "Deduction in respect of profits and gains from newly established industrial undertakings or hotel business in backward areas. 80HH. (1) Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking, or the business of a hotel, to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent thereof. (2) This section applies to any industrial undertaking which fulfils all the following conditions, namely: (i) it has begun or begins to manufacture or produce articles after the 31st day of December, 1970 but before the 1st day of April, 1990, in any backward area: xxxx xxxx xxxx" Deduction in respect of profits and gains from industrial undertakings after a certain date, etc. 80-I. (1) Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a shop or the business of a hotel or the business of repairs to ocean-going vessels or other powered craft, to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent thereof: .................." What is clear from the above is to first determine the gross total income and work out therefrom the profit attributable to the eligible industry and then deduct from the gross total income the prescribed percentage of profit of such industry as provided in Sections 80HH and 80-I to arrive at the total income on which tax is payable. The detailed procedure, sequence-wise for computation of total income on which tax is payable, in our view, is as follows: i. First business income has to be computed as stated in Section 29 by applying the provisions of Sections 30 to 43D of the Act. Since capital expenditure employed in research and development is allowable under Section 35(2) of the Act, the said deduction has to be allowed in the course of computation of business income of the assessee as a whole. The income so computed by applying the above provisions is the gross business income which so far as the respondent-assessee is concerned is the gross business income from all the industrial units. The next procedure is to club income computed under all the heads of income which will form the "gross total income" of the assessee. ii. The next procedure is to determine "total income" which among other things is by providing various deductions under Chapter VI-A from "gross total income". So far as deductions under Sections 80HH and 80-I are concerned, these deductions are with reference to income of the eligible industrial unit and, therefore, "business income" computed has to be dissected to identify the profit of the eligible industrial unit from which the percentage of eligible deductions under Sections 80HH and 80-I has to be allowed. iii. So far as deductions under Sections 80HH and 80-I are concerned, these deductions are with reference to income of the eligible industrial unit and, therefore, "business income" computed has to be dissected to identify the profit of the eligible industrial unit from which the percentage of eligible deductions under Sections 80HH and 80-I has to be allowed. iii. Even though various deductions under Chapter VI-A have to be granted from the gross total income which is the combined income computed under the provisions of the Act under all heads of income, deduction eligible under Section 80HH and Section 80-I are specific percentage of profit attributable to the eligible industry which is new and located in backward area. 6. In view of our findings above, we hold that the Tribunal went wrong in allowing deduction under Section 80HH and Section 80-I from the gross total income before granting deduction under Section 35(2) of the Act. As already held by us, deduction under Section 35(2) has to be first allowed in the computation of business income as a whole and thereafter deduction under Section 80HH and Section 80-I have to be granted only from the net income attributable to the eligible industrial unit. We accordingly allow the appeals by reversing the orders of the Tribunal and that of the first appellate authority and direct the Assessing Officer to revise the assessment as stated above, if the original assessments are in any way at variance with the above scheme of computation of relief. If the assessments are made consistent with the above scheme of computation of relief, then such assessments will stand confirmed.