Case Law Details
Med–Link Devices Pvt Ltd Vs DCIT (ITAT Mumbai)
In a recent decision by the Income Tax Appellate Tribunal (ITAT) Mumbai in the case of Med–Link Devices Pvt Ltd Vs DCIT, the issue of the allowability of medical camp expenses has come under scrutiny. The ITAT directed re-examination of expenses incurred for medical camps, emphasizing the importance of providing detailed documentation for deduction claims.
The appellant, Med–Link Devices Pvt Ltd, contested the disallowance of business promotion expenditure amounting to Rs. 35,26,803 and travelling expenditure of Rs. 2,99,000. The appellant argued that the expenses incurred for organizing medical camps were part of its normal business activities aimed at marketing its products and disseminating knowledge. However, the Assessing Officer and the CIT(A) disallowed these expenses citing CBDT Circular No. 5 of 2012, which prohibited the provision of freebies to medical professionals.
The Department, represented by the DCIT, upheld the disallowance, emphasizing the applicability of the circular and the need to curb practices that could influence medical professionals. The Department contended that the expenses incurred for medical camps could be construed as providing freebies, which were not permissible under the law.
The ITAT, while acknowledging the relevance of the circular, emphasized the need to examine the true nature of the expenditure incurred by the appellant. It granted the appellant one more opportunity to furnish item-wise details of the total expenditure incurred for organizing the medical camps. The tribunal stressed the importance of providing comprehensive documentation to support deduction claims.
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