Hegde, J.—This is a reference under section 66 (1) of the Indian Income Tax Act, 1922, to be hereinafter referred to as the "Act", at the instance of the Commissioner of Income Tax. The question of law referred for the opinion of this court is :

"Whether, having regard to clause (e) of the proviso to section 24 (2), the assessee, an unregistered firm, was entitled to carry forward the whole of the loss including the share of the loss of the two retiring partners ?"

2. The question of law arising for decision in this case, we were told, is not covered by any decision either of the Supreme Court or any of the High Courts.

3. The assessee is an unregistered firm by name "The Bharat Engineering and Construction Company, Udipi". It carries on business as engineering contractors. The firm in question was constituted as per the partnership deed dated 25th September, 1950. During the assessment years 1956-57, 1957-58 and 1958-59, it incurred losses. The losses so incurred amounted to Rs. 1,41,180. But, during the assessment year 1959-60, it earned Rs. 25,103 as profits. It claimed that it should be permitted to set of its earlier losses towards the profits earned during the assessm