KANTAWALA, C.J. - (1.)BY this reference under section 66(1) of the Indian Income -tax Act, 1922 (hereinafter referred to as 'the Act') the following two questions are referred for our determination at the instance of the assessee :
'1. Whether, on the facts and in the circumstances of the case, the assessee was entitled to a set -off in respect of the loss determined under section 10 of the Act including unabsorbed depreciation of Rs. 37,103 relating to assessment years 1957 -58 and 1958 -59 and pertaining to the business carried on by him as sole proprietor against his share of income for assessment years 1951 -60 and 1960 -61 from the same business converted into partnership firms, consisting of himself and his sons ?

(2.)WHETHER , on the facts and in the circumstances of the case, the assessee was entitled to a set -off in respect of the loss determined under section 10 of the Act including therein unabsorbed development rebate of Rs. 65,484 relating to the assessment years 1957 -58 and 1958 -59 and pertaining to the business carried on by him as sole proprietor against his share of income for assessment years 1959 -60 and 1960 -61 from the same business converted into partnership firms, consisting of himself and his sons ?'
2. So far as question No. 2 is concerned, it has not been pressed by the assessee and accordingly it is unnecessary for us to answer the same. We will briefly state the facts which are necessary for consideration of question No. 1 only.

The assessee originally carried in the business in the name and style of Messrs. Kumandas Kishandas and Messrs. Kala Silk Factory as the sole proprietor thereof. Such sole proprietor business was continued by him in that capacity up to October 24, 1957. For the assessment years 1957 -58, the assessee suffered loss in the business and such loss was determined at Rs. 84,304 in his individual case as comprising of three items, (1) Rs. 55,530 as unabsorbed development rebate. For the assessment year 1958 -59, he also suffered loss and such loss was determined at Rs. 18,917 as comprising of the following two items :

1. Rs. 8,953 being unabsorbed depreciation, and 2. Rs. 9,964 being unabsorbed development rebate.

(3.)FOR the assessment year 1959 -60 and 1960 -61 to which this reference relates, the assessee was only a partner in the two business and his total income for these two years as finally determined included the amount of Rs. 64,714 being his share of the profit from those firms for the assessment year 1959 -60 and the amount of Rs. 1,03,541 being the share of his profit from those firms for the assessment years 1960 -61.