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TMI Blog2019 (5) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... below have failed to provide as to what offence have been committed by the assessee company on incurring such expenses under any Law. There is no question of applying Explanation to Section 37(1) of the I.T. Act, 1961, against the assessee company. We, accordingly, set aside the Orders of the authorities below and delete the entire addition. - Decided in favour of assessee. - ITA.No.732/Del./2019 - - - Dated:- 29-4-2019 - Shri Bhavnesh Saini, Judicial Member And Shri L.P. Sahu, Accountant Member For the Assessee : Shri I.P.Bansal And Shri Vivek Bansal, Advocates For the Revenue : Shri P.V. Gupta, Sr. D.R. ORDER PER BHAVNESH SAINI, J.M. This appeal by assessee has been directed against the Order of the Ld. CIT(A)-1, New Delhi, Dated 19.12.2018, for the A.Y. 2015-2016, challenging the addition of ₹ 57,27,412/- under section 37 of the Income Tax Act, 1961. 2. Briefly the facts of the case are that assessee is a resident Company and filed return of income declaring income of ₹ 2,48,070/-. The assessee-company was engaged in the business of Trading/Marketing of med ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to provide correct diagnosis and treatment of the patients. The said activities by the assessee company are to make aware of the products of the assessee company to the knowledge of the Doctors and to bring its medicines to the market. Since the pharmaceutical companies make aware of such kind of products/medicines to the notice of the Doctors by conducting seminars as mentioned hereinabove by incurring certain expenditure, the said expenditure is definitely in the nature of sales and business promotion and pleaded that the same has to be allowed. 2.1. With respect to gift articles like diaries, pen sets, calendars, paper weights, injection boxes etc., embossed with bold logo of its brand name and the product, the assessee company submitted that all these gift articles are very cheap and low cost articles which bears the name of assessee company and it is purely for the promotion of its product and brand name etc. and these articles cannot be reckoned as freebies given to the Doctors. It was further submitted that since the assessee company is engaged in trading and marketing or even manufacturing of pharmaceuticals products, it can promote its sale and brand only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes. Ball pens distributed with logo of the assessee, organizing camps, small snacks provided at the camps and relates expenses which were not in the nature of gifts provided to the professional Doctors or Medical Practitioners etc. Therefore, the very basis of the authorities below was wrong in disallowing the expenditure. He has referred to various replies filed before the authorities below in which assessee has specifically pleaded that it is engaged in the business of trading/marketing of medicines and these expenses were incurred only for business promotion. He has submitted that CBDT Circular No.5/12 dated 01.08.2012 is not applicable to Pharma Companies. He has submitted that the said Circular have been considered by the ITAT, Mumbai Bench in the case of DCIT-8(2), Mumbai vs. PHL Pharma (P.) Ltd., (supra), in which the assessee company was a Pharmaceutical Company engaged in business of providing Pharma Marketing, Consultancy and Detailing services to develop mass market for pharma products. In this case, the assessee claimed advertisement and sales promotion expenses and customer related management expenses, key accounting management expenses, gift articles and cost on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which includes constant meetings/seminars/knowledge dissemination with doctors/ medical practitioners/medical stores in the areas of operation of the company. The assessee company in this way organized medical camps/blood donations camps/free check-up camp etc., and on such occasion, incurred expenditure including distribution of medicines /kits etc., with logo of assessee company and refreshment and dinner etc. The list of expenditure as per ledger account is filed which shows that business promotion expenses have been incurred mostly on medical camps organized with tea and snacks, ball pens, purchased for distribution to Doctors and Hospitals, with logo of the assessee company, organizing cardiac camps, Doctors meetings for various products for awareness of their product with refreshment and dinners etc., The authorities below have not commented upon these expenditure incurred by the assessee company for business promotion. The assessee company in this way made aware the Professionals of the product in which assessee company was giving small gifts having logo and brand name of the assessee company and product name have been mentioned. Copies of the bills and certificates from t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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