Case Law Details
Boston Scientific India Pvt. Ltd Vs DCIT (ITAT Delhi)
ITAT Delhi held that expenditure towards clinical trial incurred solely and exclusively for the business purpose is allowable expenditure.
Facts- The assessee is engaged in the promotion; marketing, sales and distribution in India of a wide range of cardio products and related medical instruments and devices manufactured by Boston Scientific Group and also provides related post-sales support services. Its product portfolio emphasizes critically important therapeutic areas such as interventional cardiology, cardiac rhythm management and electrophysiology, peripheral interventions, endoscopy, urology and women’s health.
The assessee incurred clinical trial expenses amounting to INR 1.04 crores which were in the nature of financial aid provided to two hospitals to support the clinical trials. The AO disallowed the aforesaid expenses holding that “the clinical trials are studies undertaken by the hospitals over the period of time to see the impact of different products including the products being dealt with by the assessee. It was held that the trials are not solely & exclusively to see the impact of products dealt by the assessee or clinical research to see the efficacy of the products dealt by the assessee company” and “the benefit of the trials so undertaken are not solely and exclusively for the business of assessee.” DRP upheld the above disallowance by holding that “since the assessee has failed to prove that the expenditure was incurred solely and exclusively for business purposes, therefore the same has been disallowed”.
Conclusion- We hold that clinical trials are an integral part of the feedback system on efficiency of the products of the assessee and hence it is intricately connected with the business of the assessee and hence it cannot be said that the expenses have not been incurred solely and exclusively for the business purpose. The appeal of the assessee on this ground is allowed.
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