Case Law Details
Brief of the Case
ITAT Mumbai held in the case Syncom Formulations (I) Ltd. vs. DCIT that receiving of gifts by doctors is prohibited by MCI guidelines but giving of the same by manufacturer is not prohibited under any law for the time being in force. Giving small gifts bearing company logo to doctors does not tantamount to giving gifts to doctors but it is regarded as advertising expenses. As regards sponsoring doctors for conferences and extending hospitality, pharmaceuticals companies have been sponsoring practicing doctors to attend prestigious conferences so that they gather contemporary knowledge about management of certain illness/disease and learn about newer therapies. Further, the disallowance was made by the AO by relying on the CBDT Circular dated 01.08.2012. However, the Circular was not applicable because it was introduced w.e.f.01.08.2012 i.e. assessment year 2013-2014, whereas the relevant assessment year under consideration is 2010-2011 and 2011-2012.
Facts of the Case
ITA No.6429/Mum/2013 (AY: 2010-2011)
The assessee is engaged in manufacturing of various pharmaceuticals products and having sales within and outside India. During the year under consideration, the assessee had debited an amount of Rs.4,32,11,406/- under the head sales promotion expenses. Accordingly the details were called for and noticed that an amount of Rs.22,45,000/- was relating to freebies given to medical practitioners. The AO disallowed this amount by invoking Explanation to Section 37(1) and CBDT Circular dated 1-8-2012.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
