INTRODUCTION1.1 Section 37 of the Income-tax Act, 1961 (‘the Act’) grants deduction of any expenditure incurred wholly and exclusively for the purposes of an assessee’s business or profession while determining the income chargeable under the head ‘Profits and gains of business or profession’ provided such expenditure is not of the nature referred to in sections 30 to 36 and is not a capital or a personal expense of the assessee.
1.2 An Explanation (now renumbered as Explanation 1) was inserted by the Finance (No. 2) Act, 1998 in section 37 with retrospective effect from 1st April,1962 [herein after referred to as the said Explanation] to deny deduction or allowance of any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law and to clarify that such expenditure shall not be deemed to have been incurred for the purpose of business or profession.
1.3 Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 (hereinafter referred to as “MCI Regulations”) prescribe a code of conduct and ethics that are to be adhered to by a medical practitioner. These Regulations prohibit a medical practitioner from aiding, abetting or committing any unethical acts specified in Clause 6. Some of the instances specified in Clause 6 of the MCI Regulations which are treated as unethical include: soliciting of patients; giving, soliciting, receiving or offering t
