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TMI Blog2018 (1) TMI 1671X X X X Extracts X X X X X X X X Extracts X X X X ..... octors and Medical Professionals to violate the Medical Council Act, 1956. Consequently, we are of the view that the expenditure incurred by the assessee which has resulted in the violation of the amendment to the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 under the Medical Council Act, 1956, is not an allowable expenditure and hit by the explanation to Sec.37(1) of the Act. Coming to the issue as to whether the same is operative prospectively or retrospectively or as to whether the said amendment is clarificatory in nature. A perusal of the said amendment notification dated 10.12.2009 under Clause-1(ii) specifies that it shall come into force from the date of their publication in the Official Gazette. The said amendment came to be published in the Official Gazette on 14.12.2009. Consequently, the said amendment cannot be treated as operating retrospectively nor can it be treated as clarificatory in nature, clearly the said amendment is prospective in nature and operative from 14.12.2009. CIT(A) has granted the assessee the benefit of the expenditure till 14.12.2009 and has restricted the disallowance by invoking the explanation t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted relief to the assessee, the Revenue is on appeal, to the extent that the Ld.CIT(A) has confirmed the addition representing the expenditure incurred by the assessee from 14.12.2009 to 31.03.2010, the assessee is on appeal. It was submitted by the Ld.AR that the Medical Council Act, 1956 did not apply to the assessee and the expenditure incurred by the assessee on giving gifts to the Doctors and Medical Professionals were business expenditure incurred by the assessee. It was submitted by the Ld.AR that the decision of the Co-ordinate Bench of this Tribunal in the assessee s own case for the AY 2011-12 in ITA No.2487/Mds/2016 dated 15.03.2017 did not apply to the assessee s case in so far as the Tribunal had not considered the fact that the Medical Council Act, 1956 did not apply to the assessee. The Ld.AR further placed reliance upon the decision of the Hon ble ITAT Mumbai Benches in the case of M/s.Syncom Formulations (I) Ltd., in ITA No.6429 6428/Mum/2012 dated 23.12.2015 to submit that the Co-ordinate Bench had held that the Circular issued by the CBDT explaining the decision in Circular No.5/2012 dated 01.08.2012 and consequently, if at all any disallowance was called for, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business should be allowed as allowable expenses. The Ld.CIT(A) observed that One of the main submissions of the appellant is that it is not engaged in the manufacturing of any pharmaceutical product and hence the provisions of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations 2002, have no application in its case and therefore, this claim is not acceptable. According to Ld.CIT(A), the aforesaid prohibition is not only relating to the manufacturing of any pharmaceutical products, but also includes all allied products. The appellant s product is a healthcare product and is covered by the second limb i.e. allied products. Further, the proviso to section 37(1) is relating the nature of the expenses which are paid to the doctors and medical practitioners. Any expenses paid by the manufacturers of any pharmaceutical products and allied products, to the doctors and medical practitioners, by way of freebies and gifts, are within the scope of the proviso. Therefore, this contention of the appellant stands rejected. Therefore, the Ld.CIT(A) confirmed the action of the ld. Assessing Officer and disallowance of expenditure incurred towards distribution of gold co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts accounts against income. 4. It is also clarified that the sum equivalent to value of freebees enjoyed by the aforesaid medical practitioner or professional associations is also taxable as business income or income from other sources as the case may be depending on the facts of each case. The Assessing Officers of such medical practitioner or professional associations should examine the same and take an appropriate action. 2. It is apparent that the Medical Council of India in exercise of the powers vested in it under the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 imposed prohibition on any medical practitioner or their professional associates from accepting any gift, travel facility, hospitality, cash or monetary grant from any pharmaceutical and allied health sector Industries. This regulation is a very salutary regulation which is in the interest of the patients and the public. This Court is not oblivious to the increasing complaints that the medical practitioners do not prescribe generic medicines and prescribe branded medicines only in lieu of the gifts and other freebies granted to them by some particular pharmaceutical indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon ble Himachal Pradesh High Court clearly shows that the basic intention of the decision was that the receiving of the gifts/freebies by Professionals is against public policy as also against the law in so far as the amendment by the Medical Council Act, 1956 to the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002, once receiving of such gifts have been held to be unethical obviously the corollary to this would also be unethical, being giving of such gifts or doing such acts to induce such Doctors and Medical Professionals to violate the Medical Council Act, 1956. Consequently, we are of the view that the expenditure incurred by the assessee which has resulted in the violation of the amendment to the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 under the Medical Council Act, 1956, is not an allowable expenditure and hit by the explanation to Sec.37(1) of the Act. 9. Now, coming to the issue as to whether the same is operative prospectively or retrospectively or as to whether the said amendment is clarificatory in nature. A perusal of the said amendment notification dated 10.12.2009 under Clause-1( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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