The non obstante clause in Section 37(4) of the Income-tax Act, 1961, has an overriding effect over the provisions of Sections 30 to 36 of the Act, thereby disallowing any deduction for expenditure incurred on the maintenance of a guest-house.

( 1 ) THIS reference by the Income-tax Appellate Tribunal at the instance of the Commissioner of Income-tax, West Bengal-II, Calcutta, arises out of the order of the Tribunal in I. T. A. No. 1514 (Cal) of 1992, for this court's view on the following question of law :"whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in deleting the disallowance made under Section 37 (4), the guest house expenditure without giving any specific finding ?"

( 2 ) AS will appear from the statement of the case, the Assessing Officer had disallowed a sum of Rs. 9,96,677 on account of guest-house maintenance under Section 37 (4) of the Income-tax Act, 1961. Aggrieved thereby, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals) on the ground that only a sum of Rs. 4,55,630, which had already been included in the return, had been disallowed under Section 37 (4) of the above Act and the amount of Rs. 4,86,631 had not been disallowed under Section 37 (4), inasmuch as, the same was allowable under Sections 30 and 31. The Commissioner of Income-tax (Appeals) upheld the Assessing Officer's view and dismissed the appeal. The assessee thereupon moved the Income-tax Appellate Tribunal which following its earlier decision in the assessee's own case for the assessment year 1985-86 and the decision of this court in the case of CIT v. Tungabhadra Industries Ltd. [1994] 207 ITR 553 held that the expenditure in respect of repairs amounting to Rs. 4,69,398 and the expenditure in respect of rates and taxes amounting to Rs. 16,133 were allowable as business expenditure.

( 3 ) THIS reference arises out of the said order of the learned Tribunal.

( 4 ) APPEARING for the Revenue, Mr. Pradyush Mullick, firstly urged that Section 37 of the Income-tax Act, 1961, made a special provision for expenditure not covered by sections 30 to 36 and the non obstante clause in Sub-section (4) of Section 37 of the said Act specifically excluded the special provision made in Sub-section (1) thereof.

( 5 ) REFERRING to the decision of the Supreme Court in the case of General Insurance Corporation of India v. CIT where the non obstante clause in Section 44 of the Income-tax Act was noted to have an overriding effect over other provisions contained in the Act, Mr. Mullick urged that similarly in the case of Sub-section (4) of Section 37 the non obstante clause would have an overriding effect over both Sub-sections (1) and (3 ).

( 6 ) MR. Mullick submitted that the question involved in this reference had also fallen for the consideration of this court in CIT v. Upper Ganges Sugar Mills Ltd. [1994] 206 ITR 215 and this court had held that the language of Sub-section (4) of Section 37 was quite emphatic and provided that no allowance at all was intended in respect of any expenditure incurred after February 28, 1970, on the maintenance of any residential accommodation in the nature of a guesthouse. It was held further that no allowance of depreciation is also permissible for such guest-house or any assets in such guest-house.

( 7 ) MR. Mullick also referred to an earlier decision in the case of Kesoram Industries and Cotton Mills Ltd. v. CIT [1991] 191 ITR 518, wherein this court had similarly observed that Section 37 (4) had been inserted by the Finance Act, 1970, for disallowance altogether of expenditure incurred after February 28, 1970, on the maintenance of guest-houses other than "holiday homes" in computing the profits and gains of business or profession.

( 8 ) MR. Mullick lastly referred to another decision of this court in Britannia Industries Ltd. v. CIT [2002] 257 ITR 681, where on a reference to the two aforesaid decisions in the Upper Ganges Sugar Mills Ltd. 's case and in Kesoram Industries and Cotton Mills Ltd. 's case, a Bench of this court had held that no open question of law remained for admission or further scrutiny.

( 9 ) MR. Mullick urged that similar views