Case Law Details
Mead Johnson Nutrition (India) Pvt. Ltd. Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that distribution of samples of infant milk substitutes, feeding bottles and infant foods is prohibited under section 4 of Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992. Accordingly, the same is not allowable as business expenditure.
Facts- The assessee company is engaged in the business of trading of ‘infant& ‘children nutrition food’. For the year under consideration, the assessee filed return of income on 30.11.2012 declaring total income of Rs.3,67,59,810/ – u/s. 139(1) of the Income-tax Act, 1961. The return of income filed by the assessee was selected for scrutiny and statutory notices under the Act were issued and complied with. In the scrutiny assessment completed u/s 143(3) of the Act, AO made disallowance of expenses on account of free samples amounting to Rs.1,66,083/ – and disallowance of conference & seminar expenses of Rs.44,66,926/ -. On further appeal, the Ld. CIT(A) also upheld the disallowance. Aggrieved, the assessee is before the Tribunal.
Conclusion- On perusal of section 4 of the Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992, we find that distribution of samples of Infant Milk Substitutes, Feeding Bottles and Infant Foods has been prohibited under the Act. In view of the same, the contention of the assessee that this expenditure was for the purpose of its business is not accepted as the distributing of free samples to healthcare personnel is prohibited.
The section 4 of the Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992, strictly prohibit offer of inducement of any other kind for the purpose of promoting the use or sale of the infant milk substitutes or infant foods for taking part in promoting of the infant milk substitutes, feeding bottles and infant foods. Therefore, though the assessee is claiming that the expenses on conference and seminars were for his business, however, same falls under prohibited activity and therefore, expenses incurred thereon have been validly disallowed of the Assessing Officer and confirmed by the Ld. CIT(A) invoking Explanation to section 37(1) of the Act.
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