Judgment

UNTWALIA, J.:- These six appeals have been heard together as a common question of law in relation to the assessment of the same assessee arises in them. Civil Appeals 2716-2718 of 1972 relate to the assessment years 1964-65, 1965-66 and 1966-67. The assessee appellant is a registered firm carrying on business at several places in the State of Kerla. Apart form its regular trade in various commodities, the assessee was also carrying on a business in speculation. Apropos the speculation business of the assessee the Income-tax Officer determined a loss of Rs. 40,510/-; a loss of Rs. 598 and a profit of Rupees 1,36,264/- for the assessment years 1964-1965, 1965-66 and 1966-67 respectively.

2. In apportioning the assessees income amongst its partners under Section 67 of the Income-tax Act, 1961, hereinafter referred to as the Act, the also apportioned the losses in speculation business in the two assessment years 1964-65 and 1965-66. The profit in speculation business as computed for the assessment year 1966-67 was also apportioned by the Income-tax Officer amongst the partners. The assessee contended before the Income-tax Officer that the losses in the speculation business could not be apportioned between the partners but should be carried forward and set off against the profit in the said business made in the assessment year 1966-67. The Income tax Officer rejected this contention. But the Appellate Assistant Commissioner in appeal following the decision of this Court in Commr. of Income-tax, Gujarat v. Kantilal Nathuchand Sami 63 ITR 318 accepted the assessees stand. The department took the matter in second appeal before the Income-tax Appellate Tribunal. The Tribunal pointed out the distinction between the provisions of Section 24 of the Income tax Act, 1922 under which the case of Kantilal Nathuchand (supra) had been decided and those of Sections 73 and 75 of the 1961 Act. It, therefore, allowed the departments appeal. On being asked by the assessee to state a case and make a reference to the High Court, the Tribunal referred the following question of law for opinion :

"Whether, on the facts and in the circumstances of the case, and on a true interpretation of the various provisions of the Income-tax Act, 1961, the Tribunal was correct in holding that a registered firm was not entitled to have its losses in speculation business carried forward for set off against future profits in speculation business."

3. The High Court of Kerla on a consideration of the relevant provisions of the Act contained in Chapter VI has answered the reference in favour of the Revenue and against the assessee. The decision of the High Court is reported in M. O. Devasia & Co. v. Commissioner of Income-tax, Kerala 90 ITR 525. (1973 Tax LR 138) (Ker). Civil Appeals 2716 to 2718 of 1972 have been filed in this Court by special leave.

4. Identical questions arose in respect of the assessment years 1967-68, 1968-69 and 1969-70. The High Court answered the references made in respect of those three years also against the assessee by its judgment and order dated the 24th May, 1977. Civil Appeals 365 to 367 of 1978 have been preferred from the said decision of the High Court.

5. In the case of Kantilal Nathuchand (AIR 1967 SC 632) (supra) the question for consideration was whether on a true interpretation of the various provisions of the Indian Income-tax Act 1922 speculation losses of the assessee firm for the assessment years 1958-59 and 1959-60 should be set off against its speculation profit in its assessment for the assessment year 1960-61. The provisions contained in Section 24 (1) and the two provisos appended thereto were not very clear and some apparent conflict arose between the first and the second proviso. On a consideration of the same this Court held that speculation losses of a registered firm kept apart under the first proviso to Section 24 (1) in computing its total income for one year could not be apportioned between the partners, and th