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TMI Blog2019 (6) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... re and incurred wholly and exclusively for the purpose of business of the assessee. When assessee is able to provide the business nexus of incurrence of certain expenditure with supporting documents, it cannot be simply denied / rejected by the revenue merely on the ground of propriety, which action would lead to, travelling beyond the brief and stepping into the shoes of the assessee by the revenue. We therefore hold that the expenditure incurred by the assessee towards sales promotion, advertisement and publicity is an allowable expenditure. The assessee had only distributed the DVD players, silver coins, calenders and diaries to Tablets India Ltd which was marketing the products of the assessee. There was absolutely no distribution of gifts made by assessee to any medical practitioners and hence the applicability of CBDT Circular No. 5/2012 itself deserves to be rejected. Circular issued by the CBDT cannot enlarge the scope of a different regulation issued under a different act so as to impose any kind of hardship or liability to the assessee. - Decided in favour of assessee. Claim of deduction u/s 80IC - whether disallowance of aforesaid expenditure would correspondingly go to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation to Section 115JB(2) of the Act as direct expenditure incurred for earning exempt income. X X X X Extracts X X X X X X X X Extracts X X X X ..... o be incurred by the assessee or not. b) The ld AR stated that the CBDT Circular No.5 / 2012 which the ld AO relied on to hold the expenditure incurred by the assessee is an offence is dated 01.08.2012 and hence the same would not be applicable to the impugned assessment year i.e. AY 2012-13. In support of this proposition, he relied on the co-ordinate bench decision of Mumbai Tribunal in the case of Macleods Pharmaceuticals Ltd V. Additional CIT reported in 161 ITD 291 and Syncom Formulations (I) Ltd V. DCIT in ITA No.6429 / Mum / 2012, wherein it has been held that the Circular was introduced w.e.f. 01.08.2012 and hence effective from assessment year 2013-14 onwards. c) The ld AR also stated that the assessee company had not distributed the freebies namely DVD players and silver coins to any medical practitioner but only to Tablets (India) Ltd which is marketing the assessee's products and hence the said expenditure would not be covered by Circular No.5 / 2012 of the CBDT. d) The ld AR by placing reliance on the co-ordinate bench decision of Mumbai Tribunal in the case of Solvay Pharma India Ltd V. PCIT reported in 169 ITD 13 , submitted that the Indian Medical Council (Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the said expenditure is hit by the CBDT Circular No.5 / 2012. It is well settled that the revenue cannot step into the shoes of the assessee to decide whether the expenditure is required to be incurred by the assessee or not where the genuineness of the same is not questioned. The ld AO has to see whether the particular expenditure incurred is not personal in nature , is not capital in nature and incurred wholly and exclusively for the purpose of business of the assessee. When assessee is able to provide the business nexus of incurrence of certain expenditure with supporting documents, it cannot be simply denied / rejected by the revenue merely on the ground of propriety, which action would lead to, travelling beyond the brief and stepping into the shoes of the assessee by the revenue. The various apex court decisions relied upon by the ld AR supra clearly point out this ratio. We therefore hold that the expenditure incurred by the assessee towards sales promotion, advertisement and publicity is an allowable expenditure. 2.5. It is not in dispute that the assessee had only distributed the DVD players, silver coins, calenders and diaries to Tablets India Ltd which was marketing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eutical companies by the CBDT is without any enabling provisions either under the provisions of Income Tax Law or by any provisions under the Indian Medical Council Regulations. The CBDT cannot provide casus omissus to a statute or notification or any regulation which has not been expressly provided therein. The CBDT can tone down the rigours of law and ensure a fair enforcement of the provisions by issuing circulars and by clarifying the statutory provisions. CBDT circulars act like 'contemporaneaexpositio' in interpreting the statutory provisions and to ascertain the true meaning enunciated at the time when statute was enacted. However the CBDT in its power cannot create a new impairment adverse to an assessee or to a class of assessee without any sanction of law. The circular issued by the CBDT must confirm to tax laws and for purpose of giving administrative relief or for clarifying the provisions of law and cannot impose a burden on the assessee, leave alone creating a new burden by enlarging the scope of a different regulation issued under a different act so as to impose any kind of hardship or liability to the assessee. In any case, it is trite law that the CBDT circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Sales promotion, advertisement and publicity expenses u/s 37(1) of the Act separately. Further he had again reduced the claim of deduction u/s 80IC of the Act by the very same amount of sales promotion, advertisement and publicity. This would effectively result in double disallowance made by the ld AO which we direct the ld AO to rectify. 2.10. The aforesaid findings on the issue of admissibility of sales promotion, advertisement and publicity would cover the assessee's appeal in ITA No. 2755/Chny/2017 and also Grounds 3.1. and 3.2. of Revenue's appeal in ITA No. 2793/Chny/2017. The same are disposed off accordingly. 3. Cross Objection of assessee in CO No.14/Chny/2018 was stated to be withdrawn by the ld AR in support of which an affidavit was filed before us. Respectfully taking the same on record, we dismiss the Cross Objections of the assessee as withdrawn. 4. The next ground in revenue's appeal and the additional ground in assessee's appeal to be decided is as to whether the ld CITA was justified in restricting the amount of disallowance u/s 14A of the Act in the sum of ₹ 9,89,496/- under normal provisions of the Act in the facts and circumstances of the case. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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