Sankar Prasad Mitra, J.

1. THIS is a reference under s. 66(1) of the Indian IT Act, 1922. The statement of the case relates to the asst. yr. 1960-61. The relevant accounting period is the financial year ending March 31, 1960. The assessee is a company which has been carrying on business, inter alia, in the manufacture of jute goods. The assessee's business income was finally determined by the Tribunal's order of October 27, 1964, at Rs. 23,93,166. While giving effect to the Tribunal's order the ITO set-off the unabsorbed losses of 1956-57 and 1957-58 of Rs. 3,24,849 and Rs. 20,68,317, respectively against the aforesaid business income.

2. TO the AAC the assessee pointed out that the total loss determined for the asst. yr. 1956-57 was Rs. 10,54,686 and not Rs. 3,24,849 as taken by the ITO. The AAC, after verifying the figures, directed the ITO to modify the assessment and the ITO did so accordingly. The next point raised before the AAC was regarding the set-off of losses. On behalf of the assessee it was submitted that, in the asst. yr. 1950-51, the total loss was Rs. 21,21,141, out of which in the assessment order dated April 26, 1960, for the asst. yr. 1959-60, the ITO had