Law:

Section:

JUDGMENT The Income-tax Appellate Tribunal, 'B' Bench, Allahabad, has in compliance with the direction issued by this court under section 256(2) of the Income-tax Act, 1961, referred the following question for our opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the speculative losses of assessment years 1959-60, 1960-61 and 1961-62 could be carried forward and adjusted against the speculation profits of the assessee-firm for the assessment year 1964-65?" The assessee is a registered firm. In its assessment years 1959-60 to 1963-64, losses from speculative business were determined aggregating to Rs. 37,199 as under : 1959-60 Rs. 6,499 1960-61 Rs. 14,057 1961-62 Rs. 8,663 1962-63 Rs. 6,942 1963-64 Rs. 1,038 Total Rs. 37,199 In the assessment year for 1964-65, the firm claimed that the above speculation losses which had not been allowed to be set off against the income of the regular business for the relevant years should be set off against speculation profits of that year. The Income-tax Officer did not allow the claim. On appeal, the Appellate Assistant Commissioner allowed the claim and directed the Income-tax Officer to allow the set-off of the speculation losses of earlier years against speculation profits of 1964-65 and to carry forward the balance of losses to be set off similarly in subsequent years. The department filed an appeal against this order before the Tribunal. The Tribunal upheld the order of the Appellate Assistant Commissioner and now the Commissioner has come up to this court. Counsel for the department has contended that inasmuch as the claim for set-off was being made in the assessment year 1964-65, i.e., after the Income-tax Act, 1961, had come into force, the set-off could only be allowed in accordance with the provisions of section 75 of the Act. It has been contended that under section 75 of the Act, the losses have to be apportioned between the partners and they alone are entitled to have the amount of loss set off and carried forward under section 73 of the Income-tax Act, 1961. It will be noticed that the periods 1959-60, 1960-61 and 1961-62 relate to a period…

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