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TMI Blog2016 (2) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... spitality, pharmaceuticals companies have been sponsoring practicing doctors to attend prestigious conferences so that they gather contemporary knowledge about management of certain illness/disease and learn about newer therapies. We found that the disallowance was made by the AO by relying on the CBDT Circular dated 01.08.2012 onwards. However, the Circular was not applicable because it was introduced w.e.f.01.08.2012. i.e. assessment year 2013-2014, whereas the relevant assessment year under consideration is 2010-2011 and 2011-2012. Accordingly, we do not find any merit in the disallowance - Decided in favour of assessee Addition on account of forfeiture of warrant application money - Held that:- As found that warrants were converted into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly the details were called for and noticed that an amount of ₹ 22,45,000/- was relating to freebies given to medical practitioners. The AO disallowed ₹ 22,45,000/- by invoking Explanation to Section 37(1) and CBDT Circular dated 1-8-2012. 4. By the impugned order the CIT(A) confirmed the disallowance. 5. We have considered rival contentions and found that receiving of gifts by doctors was prohibited by MCI guidelines, giving of the same by manufacturer is not prohibited under any law for the time being in force. Giving small gifts bearing company logo to doctors does not tantamount to giving gifts to doctors but it is regarded as advertising expenses. As regards sponsoring doctors for conferences and extending hospit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the terms of the issue within a period of 18 months from the date of allotment i.e. 28th Sept., 2009 resulting in violation of terms of the issue and accordingly the upfront amount of ₹ 4.60 per warrant paid by the warrant holder was forfeited by the company. The forfeited amount was credited to capital reserve in its audited accounts for the year under appeal. The AO added this amount as income of the assessee. 8. By the impugned order the CIT(A) deleted the addition after observing as under :- "1.3. I have considered the submissions of the appellant, order of the AO and facts of the case carefully, it is noticed that during the year under consideration, the assessee has raised capital through issue of convertible warrants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived for increase in share capital i.e. capital account and that the forfeited amount was disclosed as capital reserve and not credited to the profit & loss account. The AR has also relied on a number of decisions cited above and also the decision of hon'ble Supreme Court in case of Travancore Rubber & Tea Company Ltd. Vs. CIT 243 ITR 158. Thus, it was argued that since it was a capital receipt, therefore, the addition made by the A.O. is not called for. From the perusal of the submissions and facts of the case, it is clear that the assessee has raised capital through issue of convertible warrants which were to be converted into equity shares is an undisputed fact. During the year under consideration, the warrants were converted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l before us. 9. We found that warrants were converted into shares, however, money contributions did not contribute these warrants into shares, therefore, their contributions were forfeited which was treated by assessee as capital receipts. The issue is squarely covered by the decision of Hon‟ble Supreme Court in the case of Travencore Rubber & Tea Company Ltd. (supra). The case laws relied on by the AO are not applicable to the facts of the instant case, which has elaborately dealt by the CIT(A) in his order. Furthermore, tax effect in the appeal filed by the revenue, as per Circular No.21/2015, dated 10th December, 2015, is less than ₹ 10.00 lacs, therefore, the appeal of the revenue is not maintainable. Accordingly, we do not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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