Case Law Details
Fidelity Diagnostics P. Ltd Vs DCIT (ITAT Pune)
The issue in the present appeal relates to allowability of referral fees paid to doctors and nursing home by the appellant company. The Assessing Officer was of the opinion that the payment of referral fees to doctors and nursing home would amount to violation of the provisions of Medical Council (Professional Conducts, Etiquettes and Ethics) Regulation Act, 2002. Therefore, squarely hit by the Explanation 1 to section 37 of the Act. We find that an identical issue was dealt by the Hon’ble Apex Court in the case of Apex Laboratories (P.) Ltd. vs. DCIT, 442 ITR 1 (SC), wherein, the Hon’ble Apex Court held that gifting freebies, and payment of referral fees etc. is clearly prohibited by law and cannot be allowed as deduction u/s 37(1) of the Act.
In the light of authoritative pronouncement of law by the Hon’ble Supreme Court on the issue on hand, we are of the considered opinion that referral fees paid to doctors and nursing home cannot be allowed as deduction while computing the business income of an assessee.
FULL TEXT OF THE ORDER OF ITAT PUNE
This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)- National Faceless Appeal Centre, Delhi [‘the CIT(A)’] dated 18.03.2021 for the assessment year 2015-16.
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