Evolutis India Private Vs ACIT (ITAT Mumbai)
Enlargement of the scope of MCI regulation to the pharmaceutical companies or other health sector industry by the CBDT is de hors any enabling provision either under the Income Tax Act or under the Indian Medical Council Regulations. In our considered view, though the CBDT can tone down the rigours of law in order to ensure a fair enforcement of the provisions by issuing circulars for clarifying the statutory provisions, however, it is divested of its powers to create a new impairment adverse to an assessee, or to a class of assesses, without any sanction or authority of law. We find that the aspect that the CBDT is divested of its powers to enlarge the scope of MCI regulation by extending the same to pharmaceutical companies without any enabling provision either under the Income tax Act or the Indian Medical Regulations was also deliberated upon by the Tribunal in the case of Aristo Pharmaceuticals Pvt. ltd. Vs. ACIT (ITA No. 6680/Mum/2012, dated 26.07.2018).
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present appeal filed by the assessee is directed against the order passed by the CIT(A)-24, Mumbai, dated 25.06.2018 which in turn arises from the order passed by the A.O u/s 143(3) of the Income Tax Act, 1961 (for short „Act‟), dated 19.12.2017 for A.Y. 2015-16. The assessee has assailed the impugned order on the following grounds before us:
“(A) Disallowance out of Business and Promotion expenses – Rs. 12,79,359
1. The learned Commissioner of Income Tax (Appeals) [CIT(A)] erred on facts and in law in upholding the action of Assessing officer in disallowing payments made towards conferences and promotion of products under the head Business and Promotion expenses amounting to Rs.12,79,359/- u/s. 37 of IT Act, 1961.
2. The appellant prays that your honours hold that the amount of Rs.12,79,359/- is allowable as deductible expenditure under the provisions of section 37 of the IT Act, 1961;
B) General:
3. The above grounds of appeal are without prejudice to one another and the appellant craves leave to add, alter, amend, delete or modify any of the above grounds of appeal.”
2. Briefly stated, the assessee company which is engaged in the business of trading and distribution of orthopaedic implantable devices had filed its return of income for AY. 2015-16 on 25.09.2015, declaring a loss of Rs.1,64,02,283/-. The return of income filed by the assessee was initially processed as such u/s 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment u/s 143(2) of the Act.
3. During the course of the assessment proceedings, it was observed by the A.O that the assessee had claimed deduction of the following expenses:
