Judgment 1. On an application under Section 256(1) of the IT Act, 1961, the Tribunal has referred following question for opinion of this Court: “Whether the Tribunal is legally justified in allowing depreciation on guest-house ignoring the specific provisions of Section 37(4) prohibiting allowance of depreciation on guest-house?“ 2. Therelevant assessment year is 1986-87. The assessee has transacted some business as in earlier years. During the course of assessment proceedings, the AO noticed that assessee has claimed depreciation in respect of guest-house maintained by the assessee. The AO denied that claim. In appeal, CIT(A) was of the view that assessee has not furnished any evidence to support that guesthouse was used for professionals, etc. and held that when the asset, in the nature of guest-house, has not been used for the purpose of business, there was no justification for allowing depreciation on such asset. In appeal, the Tribunal followed the decision of Bombay High Court in CIT vs. Chase Bright Steel Ltd. (1989) 177 ITR 124 (Bom) holding that Sub-section (4) of Section 37 has no application to the allowances which are otherwise allowable under Sections 32 to 36 of the Act. 3. We have heard learned counsel for the parties. 4. Mr. Bhandawat, learned counsel for the Department, submits that there is a specific provision for guest-house which starts with non obstante clause and that prevails over general provision. He further submits that this issue has been considered by the Bombay High Court in the case of CIT vs. Ocean Carriers (P) Ltd. (1995) 211 ITR 357 (Bom) wherein Bombay High Court after considering the provisions of Section 37(4) has rejected the claim of assessee and held that assessee is not entitled for depreciation in the cases of guest-house. He also relied on the decision of Madras High Court in CIT vs. Mathurantakam Co-operative Sugar Mills Ltd. (2000) 241 ITR 817 (Mad). 5. Mr. Kothari, learned counsel for the assessee, submits that Section 37(4) has no application as it is just a proviso to Sub-section (1) and Sub-section (3) of Section 37. He submits that once depreciation is allowable under Section 32, that right of the assessee under Section 32 should not be disallowed invoking the provisions of Sub-section (4) of Section 37. He placed reliance on the decision of Bombay High Court in Century Spinning & Manufacturing Co. Ltd. vs. CIT (1991) 189 ITR 660 (Bom). 6. He submits that once depreciation is allowable under Section 32, that right of the assessee under Section 32 should not be disallowed invoking the provisions of Sub-section (4) of Section 37. He placed reliance on the decision of Bombay High Court in Century Spinning & Manufacturing Co. Ltd. vs. CIT (1991) 189 ITR 660 (Bom). 6. Thefacts are not in dispute that there is a finding of CIT(A) that asset i.e., guest-house has not been used for the purpose of business and that fact has not been disturbed by the Tribunal. If that asset has not been utilised for the purpose of business, there is no question of allowing any expenditure or depreciation on such asset. 7. Mr. Kothari submits that there is no base of this finding. We are not concerned, at this stage, regarding finding of fact, whether there is any basis or not. Once, that finding has not been disturbed by the Tribunal, we have to go by the finding given by the CIT(A). Otherwise also, the depreciation when specifically denied under Sub-section (4) of Section 37, cannot be allowed on the basis of Section 32 which is general provision for allowing depreciation. 8. Sub-section (4) of Section 37 reads as under: “(4) Notwithstanding anything contained in Sub-section (1) or Sub-section (3).-- .(i) no allowance shall be made in respect of any expenditure incurred by the assessee after the 28th Feb., 1970, on the maintenance of any residential accommodation in the nature of a guest-house (such residential Accommodation being hereafter in this sub-section referred to as ‘guest-house’). .(ii) in relation to the assessment year commencing on the 1st day of April, 1971, or any subsequent assessment year, no allowance shall be made in respect of depreciation of any building used as a guest-house or depreciation of any asset in a guest-house Provided that the aggregate of the expenditure referred to in Clause (i) and the amount of any depreciation referred to in Clause (ii) shall, for the purposes of this sub-section, be reduced by the amount, if any, received from persons using the guest-house: Provided further that nothing in this sub-section shall apply in relation to any guest-house maintained as a holiday home if such gue st-house- (a) is maintained by an assessee who has throughout the previous year employed not less than one hundred whole-time employees in a business or profession carried on by him; and (b) is intended for the exclusive use of such employees while on leave. Explanation: For the purposes of this sub-section,- .(i) residentialaccommodation in the nature of a guest-house shall include accommodation hired or reserved by the assessee in a hotel for a period exceeding one hundred and eighty-two days during the previous year; and .(ii) the expenditure incurred on the maintenance of a guest-house shall, in a case where the residential accommodation has been hired by the assessee, include also the rent paid in respect of such accommodation.” 9. Sub-section (4) of Section 37 starts with non obstante clause and specifically prohibits allowance of depreciation of any building used as a guest-house. It is also not the case of the assessee that guest-house was maintained as holiday home. Once specific provision is there whereby depreciation has been denied, the general provision which relates to depreciation will not prevail over this specific provision. Therefore, the depreciation is otherwise also not allowable on the guest-house maintained by the assessee. 10. In the result, we answer the question in negative i.e., in favour of Revenue and against the assessee. 11. The IT reference stands disposed of accordingly.