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TMI Blog2016 (11) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us the relevant assessment years are A.Y.2010-2011 & 2011-2012 during which this CBDT Circular was not applicable. As per the details of expenses placed on record, we found that same was in the nature of sales promotion. Neither the AO nor the CIT(A) had doubted genuineness of the expenses nor there is any allegation to the effect that expenses were not incurred for the purpose of business. Even the G.P. and N.P. rate shown by assessee nowhere indicates that assessee had claimed any excessive expenditure under the head sales promotion. No justification in the orders of lower authorities for disallowing sales promotion expenses under Explanation to Section 37(1) during the assessment year 2010-11 and 2011-12 under consideration. - Decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Sales Promotion Expenses. The Authorized Representative of the assessee was requested to inform about the nature and details of these expenses. The assessee filed details of these expenses and submitted that these expenses were incurred in the regular course of business and includes payments made for promotional items, freebies given to various medical practitioners in the country as well as abroad. It was further explained that these expenses also include amounts incurred on various field staff of the company which are spread throughout the country. During the course of assessment proceedings, the attention of the authorized representative of the assessee was drawn by AO towards amendment notification dated 10-12-2009 issued by Medical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of CBDT Circular dated 1-8-12. Ld. AR drew our attention to the precise observation of the Tribunal with regard to nature of expenditure so incurred and applicability of CBDT Circular dated 1-8-2012, which was held to be applicable from the assessment year 2013-2014. 7. On the other hand, ld. DR relied on the order of lower authorities and conceded that the issue under consideration is squarely covered by the decision of coordinate bench in the case of Syncom Formulations (supra). However, no decision to the contrary was placed on record by ld. DR. 8. We have considered rival contentions and carefully gone through the orders of authorities below. From the record we found that assessee is engaged in manufacturing and dealing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bited 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 hospitality, 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 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the expenditures were incurred wholly and exclusively for the purpose of business, therefore, same cannot be disallowed by applying CBDT Circular dated 1-8-2012 in respect of years under consideration. The Tribunal in the case of Syncom Formulations (I) Ltd.(supra) vide order 23-12-2015 have dealt with exactly similar issue wherein also assessee was engaged in manufacturing of various pharmaceutical products and having sales within and outside India. Exactly similar expenditure incurred under the head of sales promotion expenses was disallowed by the AO by applying CBDT Circular dated 1-8-2012, wherein Explanation to Section 37(1) was invoked, which was confirmed by the CIT(A). The assessee came before the Tribunal and the Tribunal h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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