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TMI Blog2022 (1) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... then go into the question of its applicability to pharmaceutical companies from 01.08.2012 onwards. It is seen that the Tribunal through its various benches has consistently held that C.B.D.T. Circular No.5 of 2012 would not have any retrospective effect but would operate prospectively from 01.08.2012. C.B.D.T. Circular No.5 of 2012 which creates a burden or liability or imposes a new kind of imparity has thus to be applied prospectively, reliance has been placed by the Tribunal on the decision of SRMB Dairy Farming Pvt. Ltd. [ 2017 (11) TMI 1494 - SUPREME COURT ] It has been held therein that while beneficial circulars have to be applied retrospectively, oppressive circulars would have prospective application. In view of this it is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CBDT) and orders dated 26.12.2012, whether the Tribunal was justified in allowing the appeal of the assessee? 2. The facts giving rise to the aforesaid substantial questions of law are that the appellant is engaged in the business of manufacturing and trading of medicines. With regard to Assessment Year 2010-11 it was noted by the Assessing Officer that the appellant had debited an amount of ₹ 3,11,52,609/- towards tour and travel expenses. According to the appellant these expenses were incurred on medical practitioners to enable them to attend various conferences held in different parts of the world. The Assessing Officer disallowed proportionate expenditure to the tune of ₹ 17,83,844/-. Being aggrieved by the aforesaid dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which was a pharmaceutical company could not seek deduction of business expenditure in that regard. The learned counsel referred to the judgment of the Himachal Pradesh High Court dated 26.12.2012 in CWP No.10793 of 2012-J [Confederation of Indian Pharmaceutical Industry (SSI) Versus The Central Board of Direct Taxes (CBDT) Another] in that regard. He further placed reliance on the decisions in Overseas Trading Shipping Co.(P) Ltd. Versus Assistant Commissioner of Income Tax [(2013) 38 taxmann.com 86] which judgment of the Gujarat High Court was affirmed by the Hon ble Supreme Court in [2014(51) taxmann.com 374], Commissioner of Income-tax Versus Bhor Industries (P) Ltd. [2006 (284) ITR 319], J.K. Panthaki Co. Versus Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dice to aforesaid it was submitted that Circular No.5 of 2012 having been issued on 01.08.2012 it would apply prospectively and would have no retrospective effect. Since the expenditure in question pertained to Assessment Year 2010-11 it was not open for the Revenue to rely upon that Circular. It was further submitted that various Tribunals in the State had taken a consistent view that Circular No.5 of 2012 would not be applicable to pharmaceutical companies and the Revenue had accepted those decisions as a result of which such view was binding on the Tribunal. The Tribunal therefore followed the same and there was no reason to interfere with the impugned order. To substantiate his contentions the learned counsel placed reliance on the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from taking any gift, travel facility, hospitality, cash or monetary grant from pharmaceutical and allied health sector industries. As per Circular No.5 of 2012 dated 01.08.2012 claim of any expense incurred in providing the aforesaid or similar freebees in violation of the provisions of the said regulations were held inadmissible under Section 37(1) of the Act of 1961 being an expense prohibited in law. It was further stated that such dis-allowance would be made in the hands of such pharmaceutical or allied health sector industries or other assessee which have provided such freebees and claim the same as a deductible expense in its account against income. 6. Before considering the contention as raised on the applicability of the Medi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctively, reliance has been placed by the Tribunal on the decision of the Hon ble Supreme Court in Director of Income Tax Versus SRMB Dairy Farming Pvt. Ltd. [(2018) 400 ITR 9 (SC)]. It has been held therein that while beneficial circulars have to be applied retrospectively, oppressive circulars would have prospective application. In view of this it is clear that C.B.D.T. Circular No.5 of 2012 imposes a new kind of imparity and thus the view taken in the aforesaid decisions by the Tribunal is in consonance with the law laid down by the Hon ble Supreme Court. It is thus clear that the said Circular could not have been applied retrospectively and especially to Assessment Year 2010-11 in the present case. On this count it is not necessary t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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