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TMI Blog2018 (1) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... s, conferences and thereby creating awareness amongst doctors about the new research in the medical field and therapeutic areas, etc. Every day there are new developments taking place around the world in the area of medicine and therapeutic, hence in order to provide correct diagnosis and treatment of the patients, it is imperative that the doctors should keep themselves updated with the latest developments in the medicine and the main object of such conferences and seminars is to update the doctors of the latest developments, which is beneficial to the doctors in treating the patients as well as the pharmaceutical companies. - Decided in favour of assessee. - ITA No.3585/Mum/2016 - - - Dated:- 11-1-2018 - SHRI R.C.SHARMA, AM AND SHRI RAM LAL NEGI, JM For The Assessee : Shri Madhur Agarwal For The Revenue : Shri Manjunatha Swamy ORDER PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT-2, Mumbai dated 30/03/2016 for A.Y.2011-12 in the matter of order passed u/s.263. 2. In this appeal, assessee is aggrieved by the order of CIT holding that order passed by the AO is erroneous and prejudicial to the interest of rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned AR, in view of the above, it will be appreciated that the details of expenditure in connection with advertisement and publicity propaganda were specifically called for and examined during the course of assessment proceedings and hence there is no question of revising the order under section 263 on the said issue. Further, there is no warrant whatsoever for invoking the provisions of section 263 as the assessment order is neither erroneous nor prejudicial to the interest of revenue. 8. Learned AR also invited our attention to the order of Tribunal in the case of Syncom Formulations (I) Ltd., in ITA No.6429 6428/Mum/2012 for the A.Y.2010-11 and 2011-12 dated 23/12/2015 wherein similar expenditure was allowed by observing that CBDT Circular dated 01/08/2012 was not applicable for the assessment years under consideration, because it was introduced w.e.f. 01/08/2012 i.e. A.Y.2013- 14, whereas the relevant assessment year under consideration was 2010-11 and 2011-12. 9. Reliance was also placed on the decision of the Co-ordinate Bench in case of PHL Pharma (P) Ltd., dated 12/01/2017 wherein similar expenditure was examined threadbare by the Tribunal. 10. It was further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducts to key doctors or medical practitioners, then only it can successfully launch its products/medicines. This kind of expenditure is definitely in the nature of sales and business promotion, which has to be allowed. With regard to the gift articles and free samples of medicines, the assessee gives various kind of articles like, diaries, pen sets, calendars, paper weights, injection boxes etc. embossed with bold logo of its brand name and the product name so that the doctors remembers the brand of the assessee and also the name of the medicine. All the gift articles are low cast articles which bears the name of assessee and it is purely for the promotion of its product, brand reminder, etc. These articles cannot be reckoned as freebies given to the doctors. Even the free sample of medicine is only to prove the efficacy and to establish the trust of the doctors on the quality of the drugs. This again cannot be reckoned as freebies given to the doctors but for promotion of its products. The pharmaceutical company, which is engaged in manufacturing and marketing of pharmaceutical products, can promote its sale and brand only by arranging seminars, conferences and thereby creating aw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that assessment order did not whisper on the huge expenditure so claimed by the assessee which has been considered by CIT in his order u/s.263. As per learned CIT DR, AO has not formed any opinion on this issue which clearly implies that no enquiry has been made by the AO, therefore, action of the CIT in branding the order as erroneous and prejudicial to the interest of the Revenue is fully justified. 16. Reliance was placed by learned DR on the decision of Delhi High Court reported at 99 ITR 375 in the case of Horizon Investment Company reported at 187 ITR 401. Further reliance was placed on the following judicial pronouncements: 1) CIT V. Ballarpur Industries Ltd., ITR No. 27 of 2007 (Bombay High Court) 2) Jai Steel India V. Asstt. Commissioner of lncome-tax (2013) 259 CTR (Raj) 281 (High Court of Rajasthan at Jodhpur) 3) Rajmandir Estates Pvt. Ltd. Vs. Pr. CIT 77 Taxmann.com 285 (Supreme Court) 4) Intas Pharmaceuticals Ltd. V. Dy, C.I.T., Cent. [2013] 33 Taxmann.com 38 (Ahmedabad - Trib.) 5) Commissioner of Income-tax V. Ashok Logani [2011] 11 Taxmann.com 28 (Delhi High Court) 6) Bassera Realtors (P.) Ltd. Vs. Commissioner of Income-tax [201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicability of the MCI Regulations was always to cover only individual medical practitioners, and not the pharmaceutical and medical device companies. Whether there is any contravention of the MCI Regulations or not is a matter which can be decided by the MCI itself and not by the Income-tax Department. Furthermore, the MCI has itself admitted that it has no jurisdiction whatsoever over any association/ society etc and its jurisdiction is confined only to the conduct of the registered medical practitioners. Furthermore, since the said MCI Regulations 2002 contains punitive provisions, it has to be read strictly and consequently it can apply only to Medical Practitioners and Physicians and not to the pharmaceutical companies. Further, MCI Act, 1956 does not apply pharmaceutical companies and consequently MCI Regulations 2002 cannot apply to such companies. 21. CBDT Circular no. 5 of 2012 seeks to disallow expenditure incurred by pharmaceutical companies inter-alia in providing freebies to doctors in violation of the MCI Regulations. The term freebies has neither been defined in the Income-tax Act nor in the MCI Regulations . However, the expenditure so incurred by assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch offence of law has been brought on record, which prohibits the pharmaceutical company not to incur any development or sales promotion expenses. A law which is applicable to different class of persons or particular category of assessee, same cannot be made applicable to all. The regulation of 2002 issued by the Medical Council of India (supra), provides limitation/curb/prohibition for medical practitioners only and not for pharmaceutical companies. Here the maxim of Expressio Unius Est Exclusio Alterius is clearly applicable, that is, if a particular expression in the statute is expressly stated for particular class of assessee then by implication what has not been stated or expressed in the statute has to be excluded for other class of assessee. If the Medical Council regulation is applicable to medical practitioners then it cannot be made applicable to Pharma or allied health care companies. If section 37(1) is applicable to an assessee claiming the expense then by implication, any impairment caused by Explanation 1 will apply to that assessee only. Any impairment or prohibition by any law/regulation on a different class of person/assessee will not impinge upon the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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