April 2022
Business expenditure — Disallowance — Expenses prohibited in law — CBDT Circular No. 5 dated 1st August, 2012 disallowing expenses in providing free gifts or facilities to medical practitioners by pharmaceutical and allied health sector industry — Circular not applicable retrospectively — Expenses deductible for earlier years
By K. B. Bhujle, Advocate
2 Principal CIT vs. Goldline Pharmaceuticals Pvt. Ltd.
[2022] 441 ITR 543 (Bom)
A.Y.: 2010-11; Date of order: 14th January, 2022
S. 37(1) of ITA, 1961
Business expenditure — Disallowance — Expenses prohibited in law — CBDT Circular No. 5 dated 1st August, 2012 disallowing expenses in providing free gifts or facilities to medical practitioners by pharmaceutical and allied health sector industry — Circular not applicable retrospectively — Expenses deductible for earlier yearsThe assessee manufactured and traded in medicines. For the A.Y. 2010-11, the assessee claimed deduction u/s 37 of the Income-tax Act of expenditure incurred towards tour and travel expenses of medical practitioners to enable them to attend conferences held in different parts of the world. The Assessing Officer applied CBDT Circular No. 5 of 2012 and disallowed proportionate expenditure.
The Tribunal allowed the assessee’s claim and held that the disallowance of expenditure on the basis of Board’s Circular No. 5 of 2012, dated 1st August, 2012 was without merit.
On appeal by the Revenue, the Bombay High Court upheld the decision of the Tribunal and held as under:
“i) Under the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 as amended on 10th December, 2009 the Medical Council of India imposed a prohibition on medical practitioners and their professional associations from ta
