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TMI Blog2019 (8) TMI 1444X X X X Extracts X X X X X X X X Extracts X X X X ..... ot to subject such assessee to double taxation on the same income. If the interpretation put forward by the learned CIT Departmental Representative is accepted, it shall render the provision of s. 91(1) itself as redundant. We find that the assessee has discharged its onus of proving that it has in fact made the payment of taxes in Kuwait in subsequent periods. The CIT(A) has recorded the dates and amount of payment of taxes in Kuwait by the assessee and has recorded that the assessee has furnished before him the original documents evidencing these payments and the same have also been furnished before the AO and has been verified by him. There is no material before us to controvert these findings of the CIT(A) - assessee is entitled to relief u/s 91(1) of the Act and the order of the CIT(A) is confirmed and the ground of appeal of Revenue is dismissed. - ITA No. 226/PUN/2017 - - - Dated:- 27-8-2019 - SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM For the Assessee : Shri Nikhil Pathak For the Revenue : Shri S. B. Prasad ORDER PER D. KARUNAKARA RAO, AM: This appeal is filed by the assessee aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he claim of the assessee was allowed. The assessee submits that the disallowance made in the year under consideration may kindly be deleted in view of the decision of Hon ble ITAT for A.Y. 2010 - 11. 5. The ld. Counsel for the assessee further relied on the decision of the Co-ordinate Bench of the Tribunal in assessee s own case vide ITA No.1532/PUN/2015 for the assessment year 2010-11 dated 29.01.2018, copy of which is placed on record and submitted that the said issue is now covered by the said decision of the Tribunal (supra) and decided in favour of the assessee. The contents of para 8 onwards of the said decision (supra) are relevant in this regard. 6. On the other hand, ld. DR for the Revenue heavily relied on the orders of the revenue authorities. 7. After hearing both the sides and considering the material available on record, we find it relevant to extract the contents of para 8 and 9 of the order of Tribunal and the same are extracted hereunder :- 8. We heard both the parties on the issue of requirement of making disallowance u/s.37(1) of the Act in respect of the companies, the giver of the gifts and the articles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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........... 10. From the perusal of the nature of expenditure incurred by the assessee, it is seen that under the head Customer Relationship Management , the assessee arranges national level seminar and discussion panels of eminent doctors and inviting of other doctors to participate in the seminars on a topic related to therapeutic area. It arranges lectures and sponsors knowledge upgrade course which helps pharmaceutical companies to make aware of the products and medicines manufactured and launched by it. Under Key Account Management, the assessee makes endeavour to create awareness amongst certain class of key doctors about the products of the assessee and the new developments taking place in the area of medicine and providing correct diagnosis and treatment of the patients. The said activities by the assessee are to make the doctors aware of its products an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iguity of any kind in the scheme of the Indian Medical Council Act, 1956 that it neither deals with nor provides for any conduct of any association / society and deals only with the conduct of individual registered medical practitioners. There is no other interpretation, which is possible under the Act. 20. The intent of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation to Section 37(1) invoked by the CIT, the Explanation provides an embargo upon allowing any expenditure incurred by the assessee for any purpose which is an offence or which is prohibited by law. This means that there should be an offence by an assessee who is claiming the expenditure or there is any kind of prohibition by law which is applicable to the assessee. Here in this case, no such 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 regulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, such a CBDT circular cannot be reckoned to have retrospective effect. 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 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. 9. The above judgmental laws are relevant for the proposition that the circular issued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est pertaining to A.Y. 2011 - 12. The learned CIT(A) has discussed this issue in para 6 - 6.2 of his order. According to him, Emcure USA had paid TDS during F.Y. 2014 - 15 and the assessee cannot be granted pro rata credit of the said TDS in A.Y. 2011-12. He has stated that the assessee by making such a claim is claiming credit for the TDS amount which was not paid during the concerned financial year by Emcure USA. Accordingly, he denied the claim of the assessee. 2.3] The assessee submits that the denial of foreign tax credit by the learned CIT(A) is not justified. As stated above, the assessee has already offered the interest income of ₹ 4,91,47,872/- on accrual basis in A.Y. 2011 - 12 even though, no interest was received during the year under consideration. Now, subsequently, Emcure USA has deducted TDS on the said interest in F.Y. 2014 - 15. The assessee has claimed the credit on pro rata basis of the TDS deducted by Emcure USA. The assessee has also given a written undertaking / statement that if the credit for the aforesaid foreign TDS is granted, the assessee will not claim interest on the refund arising on account of grant of the aforesaid foreign tax c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was paid in the subsequent year. However, even in the context of the TDS deducted in India, if the income is offered in year I and the TDS has been paid by the deductor in year III, the credit for the same is to be granted in year I because the income was offered in year I. Applying the same principle to foreign TDS, the assessee submits that there is no absurdity in its claim. 2.7] The assessee would further like to place reliance on the decision in the case of Petroleum India International [2008] 26 SOT 105. In that case, the assessee had claimed credit of the taxes paid in Kuwait in A.Y. 1996 - 97, since the income was offered in that year. The actual taxes were paid in the subsequent year in five equal instalments. The claim for foreign tax credit was disallowed since the tax was not paid in the concerned year but in the subsequent year. Hon'ble ITAT held that ultimately the tax has been in the subsequent year and the credit for the said taxes is allowable in the year in which the income was offered to tax. This issue travelled before Hon'ble Bombay H.C. [reported in 29 Taxmann.com 250] wherein it has been held that the credit for the foreign tax credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re extracted hereunder :- 12. We have considered the rival submissions carefully. We find that the language of s. 91(1) of the Act is unambiguous on the issue, which provides that where the assessee proves that in respect of his income which accrued or arose during that previous year outside India and he has paid in any country with which there is no agreement under s. 90 for the relief or avoidance of double taxation, he shall be entitled to deduction from the Indian income-tax payable by him of a sum calculated on such doubly taxed income. We find that nowhere in the provision of s. 91(1) of the Act, it is provided that the payment of taxes outside India shall be during the relevant previous year itself. The purpose of this provision of s. 91(1) of the Act is to provide relief in a case where the assessee has paid the taxes outside the country, not to subject such assessee to double taxation on the same income. If the interpretation put forward by the learned CIT Departmental Representative is accepted, it shall render the provision of s. 91(1) itself as redundant. We find that the assessee has discharged its onus of proving that it has in fact made the payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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