Speculative loss of a registered firm was not apportionable to partners and could be carried forward for later set-off.

Speculative loss of a registered firm was held to fall outside the computation of business income under the first proviso to section 24(1), so it could not be apportioned among the partners under the second proviso to section 24(1). The court read that proviso as confined to losses within section 24(1) and not extending to speculative loss excluded by the statutory computation scheme. Section 24(2), however, expressly covered speculative loss and permitted carry forward where it was not set off under sub-section (1); the firm was therefore entitled to carry the loss forward and set it off against subsequent speculative profits.

---

---

Issues: Whether speculative loss incurred by a registered firm could be apportioned among the partners under section 24(1) or had to be ignored in the firm's current computation and carried forward by the firm under section 24(2) for set-off against subsequent speculative profits.

Analysis: The scheme of the Act was read as separating computation of business income from the later question of set-off. Speculative loss was held to be excluded from the computation of business income by the first proviso to section 24(1), so that it did not enter the total income of the registered firm and could not be treated as a loss liable to apportionment among partners under the second proviso to section 24(1). The second proviso was confined to losses within the scope of section 24(1) and could not be expanded to cover speculative loss. Section 24(2), by contrast, was held to cover speculative loss expressly through clause (i), and its language permitting carry forward of loss not set off under sub-section (1) was read broadly enough to include loss which could not be set off at all because section 24(1) did not apply to it.

Conclusion: Speculative loss of a registered firm was not apportionable among the partners under section 24(1) and the firm was entitled to carry it forward under section 24(2) and set it off against subsequent speculative profits.

Final Conclusion: The reference was answered in favour of the assessee, and the registered firm's speculative losses for the earlier years were held available for carry forward and set-off in the firm's hands.

Ratio Decidendi: Where a proviso is confined to losses within the main enactment, it cannot be expanded to include a loss excluded from that enactment by the statute's computation scheme; a loss expressly covered by the carry-forward provision may be carried forward even though it is not set off under the general set-off provision.

---