1. THE Income-tax Appellate Tribunal, 'B' Bench, Allahabad, has in compliance with the direction issued by this court under Section 256(2) of the Income-tax Act, 1961, referred the following question for our opinion :

"Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the speculative losses of assessment years 1959-60, 1960-61 and 1961-62 could be carried forward and adjusted against the speculation profits of the assessee-firm for the assessment year 1964-65?"

2. THE assessee is a registered firm. In its assessment years 1959-60 to 1963-64, losses from speculative business were determined aggregating to Rs. 37,199 as under :

1959-60 Rs. 6,499

1960-61 Rs. 14,057

1961-62 Rs. 8,663

1962-63 Rs. 6,942

1963-64 Rs. 1038

Total Rs. 37,199

In the assessment year for 1964-65, the firm claimed that the above speculation losses which had not been allowed to be set off against the income of the regular business for the relevant years should be set off against speculation profits of that year. The Income-tax Officer did not allow the claim. On appeal, the Appellate Assistant Commissioner allowed the claim and dire