DIWAN, J. - (1.)THE question in each of these four references has been referred to this court at the instance of the revenue and the question is similar in each case, namely :
'Whether, on the facts and in the circumstances of the case, the assessee -firm was entitled to the set -off of speculation loss of Rs. 26,947 determined for the assessment year 1962 -63, against speculation profit made in the year under reference ?'

(2.)THE year under reference is different in each of the four cases which are governed by the provisions of the Income -tax Act, 1961, and not by the provisions of the Indian Income -tax Act, 1922. The assessment years are different in each case and the figure of carried forward loss is different in each case but the question of law which has been referred is the same, namely, whether a registered firm an carry forward losses incurred in speculation business and have them set off against profits made in a subsequent year, also from speculation business.
Each of the four assessees in these four references is a registered firm and we will refer to the facts in Income -tax Reference No. 5 of 1971 only by way of illustration. In this reference the assessee is a registered firm. It was also registered in the preceding years. Besides other business activities, the assessee carried on speculation business. For the year 1962 -63, it suffered a loss of Rs. 26,947 in speculation business. In assessment year 1963 -64, the firm made a profit of Rs. 93,598 in speculation and it incurred a loss of Rs. 34,275 in other business. The Income -tax Officer determined the total income of the assessee for the assessment year 1963 -64 at Rs. 59,323, that is, profit made in the year 1963 -64, from speculation less the loss incurred in that same year from his other business. The assessee contended before the Income -tax Officer that the speculation loss for the contended before the Income -tax Officer that the speculation loss for the year 1962 -63, namely, Rs. 26,947, should be set off against the speculation profit for the year under reference. This plea was rejected by the Income -tax Officer who held that the speculation profit had to be allocated as per the provisions of the Act amongst the partners. The assessee carried the matter in appeal to the Appellate Assistant commissioner who dismissed the appeal and upheld the order of the Income -tax Appellate Tribunal and was carried in second appeal before the Income -tax Appellate Tribunal and the Tribunal held that the provisions under the Income -tax Act, 1961, were analogous to the provisions of the Indian Income -tax Act, 1922, so far as carry forward and set off of speculation losses were concerned and hence the ratio of the decision of the Supreme Court in commissioner of Income -tax v. Kantilal Nathuchand Sami applied to this case. The Tribunal, therefore, held that the speculation loss determined for the year 1962 -63 was to be set off against the speculation profit in a subsequent year. The Tribunal, therefore, allowed the appeal so far as this particular point was concerned. Thereafter, at the instance of the revenue the question we have set out hereinafter, at the instance of the revenue the question we have set out hereinafter, at the instance of the revenue the question we have set out hereinabove has been referred to us for our decision.

(3.)IN order to appreciate the contention which arises in this case, it would be necessary to refer to some of the sections in the 1961 Act and compare them with similar provisions of the 1922 Act. In the 1961 Act provisions regarding set off and carry forward and set off of losses are to be found in sections 70 to 80 and under section 70, an assessee can set off loss from one source against income from another source under the same head of income. This provision applies to income from any source falling under any head of income other than 'Capital gains' and if the computed income shows a loss, the assessee shall be entitled to have the amount of such loss set off against the income under the same head. Under section 71 provision is made for set off of loss from one head against income from another. Here also the benefit of such set off is available in case of income falling under any head other than 'Capital gains' and if in respect of any particular assessment year, the net result of the computation under any head of income other than 'Capital gains' is a loss and the assessee has no income under the head 'Capital gains', he shall, subject to the provisions of Chapter VI, be entitled to have the amount of such loss set off against his income, if any, assessable for that assessment year under any other head. Under section 72, provision in made for carry forward and set off of business losses. It is to be borne in mind that sections 70 and 71 apply only to set off of loss in the same assessment year where as sections 72, 73 and 74 deal with losses in speculation business and losses under the head 'Capital gains' and carry forward and set off of losses in any business other than speculation business and it provides that where for any assessment year, the net result of the computation under the head 'Profit and gains of business or profession' is a loss to the assessee, not being a loss sustained in a speculation business, and such loss cannot be or is not wholly set off against income under any head of income in accordance with the provisions of section 71, so much of the loss as has not been set off or, where the assessee has income only under the head 'Capital gains' or where he has no income under any other head, the whole loss shall, subject to the other provisions of Chapter VI, be carried forward to the following assessment year, and such carried forward loss can in the subsequent assessment year be set off against the profits and gains, if any, of any business or profession carried on by him and assessable for that assessment year; provided that the business or profession for which the loss was originally computed continued to be carried on by him in the previous year relevant for that assessment year. It is to be noticed that under sub -section (3) of section 72, no loss other than the loss referred to in the proviso to sub -section (1) of section 72 shall be carried forward for more than eight assessment years immediately succeeding the assessment year for which the loss was first computed. Under section 73 with which we are directly concerned in the present case, under sub -section (1), any loss computed in respect of a speculation business carried on by the assessee, shall not be set off except against profits and gains, if any, of another speculation business. Under sub -section (2) of section 73, where for any assessment year any loss computed in respect of a speculation business has not been wholly set off under sub -section (1), so much of the loss as is not so set off or the whole loss where the assessee had no income from any other speculation business shall, subject to the other provisions of Chapter VI, be carried forward to the following assessment year, and it shall be set off against the profits and gains, if any, of any speculation business carried on by him assessable for that assessment year; under sub -section (4) of section 73, no such loss can be carried forward for more that eight years immediately succeeding the assessment year for which the loss was first computed. Similarly, under section 74, where in respect of any assessment year, the net result of the computation under the head 'Capital gains' is a loss, such loss shall, subject to the other provisions of Chapter VI, be dealt with, as mentioned in clauses (i) and (ii), and here also the loss under the head 'Capital gains' can be carried forward and set off against the profit occurring under the head 'Capital gains' in a subsequent year. A distinction is made between 'profits from short -term capital assets' and 'profits from capital assets other than short -term capital assets' and the carried forward loss has to be set off against the appropriate profits from short -term capital assets and assets other than short -term capital assets and the carried forward loss from short -term capital assets can be carried forward for eight years and from capital assets other than short -term capital assets can be carried forward for four assessment years. Then comes section 75 which is the most material section for the purposes of this judgment and we will reproduce it in full :
'75. Losses of registered firms. - (1) Where the assessee is a registered firm, any loss which cannot be set off against any other income of the firm shall be apportioned between the partners of the firm, and they alone shall be entitled to have the amount of the loss set off and carried forward for set off under sections 70, 71, 72, 73 and 74.'

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