ITO Vs. Sunflower Pharmacy (ITAT Ahemdabad)
Receiving of gifts by doctors was prohibited by MCI guidelines, giving of the same by manufacturer is not prohibited under any law for the time being in force. Giving small gifts bearing company logo to doctors does not tantamount to giving gifts to doctors but it is regarded as advertising expenses. As regards sponsoring doctors for conferences and extending hospitality, pharmaceuticals companies have been sponsoring practicing doctors to attend prestigious conferences so that they gather contemporary knowledge about management of certain illness/disease and learn about newer therapies. We found that the dis allowance was made by the AO by relying on the CBDT Circular dated 01.08.2012 on wards. However, the Circular was not applicable because it was introduced w.e.f. 01.08.2012. i.e. assessment year 2013-2014. Whereas, the relevant assessment year under consideration is 2011-2012.
Since ITAT Ahmedabad, ‘SMC’ Bench has deleted the dis allowance of Rs. 41,39,131/- against which the penalty of Rs. 12,78,996/- was levied. Now they are remains no basis at all laving the penalty for concealment, therefore, we cancel the penalty.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
This is an appeal by the assessee against the order of the Commissioner of Income Tax(Appeals)-3, Ahmedabad [CIT(A) in short] vide Appeal No.CIT(A)-3/ITO/3(3)(5)/517/14-15 dated 12/06/2015 in the matter of assessment order under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) relevant to the Assessment Year (AY) 2011-12.
1. The CIT(A) has erred in law and on facts in deleting the penalty levied u/s. 271(1)(c) of the Act of Rs. 12,78,996/-.
1.1 The CIT(A) has erred in law and on facts in not appreciating that the commission was paid to the doctors in violation of the provisions of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulation, 2002.
2. On the facts and circumstances of the case, the Ld. Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer.
3. It is, therefore, prayed that the order of the Ld. Commissioner of Income tax (A) may be set-aside and that of the Assessing Officer be restored.
2. The brief facts of the case are that in this case, return of income for A.Y. 2011-12 was filed on 29.09.2011 declaring total income of Rs.1,78,930/-. Assessment was made u/s.143(3) on 26/02/2014 determining total income of Rs.43,20,960/- after making the following dis allowance:-
