AJIT K. SENGUPTA, J.

( 1 ) IN this reference under Section 256 (1) of the Income-tax Act, 1961, the following questions of law have been referred to this court for the assessment year 1985-86 :"1. Whether, on the facts and in the circumstances of the case and also on a proper interpretation of Sections 71 and 72 of the Income-tax Act, 1961, the Tribunal was correct in law in holding that the speculation profit of the current year would not be available for set off under Section 70 of the Income-tax Act, 1961, against the current business loss of the assessee before adjustment under Sub-section (2) of Section 73 of the Income-tax Act, 1961 whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in upholding the Commissioner of Income-tax (Appeals)'s order that speculation profit of the current year should first be adjusted against the speculation loss of earlier years and not against the current year's business loss ?

( 2 ) SHORTLY stated, the facts are as under : the assessee is an investment company, During the year, the assessee earned speculation profit of Rs. 4,60,475. The Assessing Officer adjusted the speculation profit of the assessee against the business loss of the current year and the balance was set off against speculation loss carried forward from the assessment years 1981-82 and 1982-83, and consequently nil income was taken for the assessment year 1985-86.

( 3 ) ON appeal, the Commissioner of Income-tax (Appeals) held that as per Section 73 (2) of the Act, the brought forward speculation business losses should be set off only against the speculation business profits for the following assessment years. Accordingly, the assessed speculation business losses for the assessment years 1980-81 to 1984-85 would require to be set off only against the assessed speculation business income of Rs. 4,60,475 for the assessment year 1985-86. The unabsorbed speculation business losses would be carried forward under Section 73 (2) for being set off against the speculation business profits for the following years according to law. The Assessing Officer was directed accordingly to take action.

( 4 ) ON further appeal before the Tribunal, the Departmental Representative, referring to Sections 71, 72 and 73 of the Act, urged that the direction given by the Commissioner of Income-tax (Appeals) was not in accordance with the said provisions. The Assessing Officer allowed the set off against the provisions of Sections 71, 72 and, therefore, the order of the Assessing Officer on this issue should be maintained.

( 5 ) COUNSEL for the assessee referred to Explanation 2 to Section 28, Section 43 (5) and Section 73 of the Act and urged that speculative business of an assessee is a separate and distinct business and the loss earned under this head should be separately treated. The speculative loss is only available for set off against the speculative profit of the year or against that of the subsequent years. Section 73 is very clear and, therefore, the Commissioner of Income-tax (Appeals) was justified in allowing the claim of the assessee.

( 6 ) THE Tribunal after considering the submission of the parties held that the speculative profit of the assessee was not available for set off against the other income of the assessee for the year. Under the said circumstances, the Tribunal held that the finding of the Commissioner of Income-tax (Appeals) was in accordance with the provisions of Section 73 and accordingly the same was maintained.

( 7 ) AT the hearing before us, the contention raised before the Tribunal have been reiterated. Our attention has been drawn by learned counsel for the Revenue to a decision of the Supreme Court in the case of CIT v. Harprasad and Co, P. Ltd. In that case, during the accounting period ending April 30, 1954, relevant to the assessment year 1955-56, the assessee sold certain shares at a loss of Rs. 28,662 which it claimed as a revenue loss. Both the Income-tax Officer and

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