TaxTMI 
TaxTMI 
2020 (10) TMI 1201
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.... facts and in the circumstances of the case and in law, the ITAT erred in holding that there is no prohibition by law within the meaning of Explanation 1 to Sec.37(1) of the Income Tax Act on claiming sales promotion expenses as deduction u/s.37(1) without appreciating the fact that providing freebies by pharmaceutical companies is a natural corollary violation of the provisions of MCI Regulations, 2002." 2. Briefly stated, the assessee company which is engaged in the business of manufacturing and sale of pharmaceuticals and allied products had filed its return of income for A.Y. 2012-13 on 21.09.2012, declaring its total income at Rs. 270,68,80,787/-. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec.143(2) of the Act. Original assessment under Sec.143(3) was framed by the A.O vide his order dated 06.01.2015, determining the total income of the assessee company at Rs. 282,06,25,970/-. After the culmination of the assessment proceedings the Principal Commissioner of Income Tax-2, Mumbai, (for short "Pr.CIT‟) in exercise of the powers vested with him under Sec.263 of the Act called for the assessment records of the assessee company. On a ....
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....ed the assessment framed by the A.O under Sec.143(3) r.w.s 263, dated 29.09.2017 before the CIT(A). Observing, that the Tribunal while disposing off the assessee‟s appeal against the order passed by the Pr.CIT-2, Mumbai, under Sec.263 of the Act, had quashed the order passed by the Pr.CIT under Sec.263, dated 31.03.2017, the CIT(A) concluded that the assessment framed under Sec.143(3) r.w.s 263 could not be sustained and was liable to be quashed. 5. The revenue being aggrieved with the order passed by the CIT(A) has carried the matter in appeal before us. It is the claim of the revenue that the CIT(A) had erred in vacating the disallowance of the assessee‟s claim of sales promotion expenses loosing sight of the fact that freebies expenses booked by the assessee being in clear violation of the provisions of the MCI Regulations, 2002, was hit by the "Explanation 1‟ to Sec. 37(1) of the Act. The ld. Authorized Representative (for short "A.R‟) for the assessee at the very outset of the hearing of the appeal submitted, that now when the order passed by the Pr. CIT-2, Mumbai, under Sec.263 of the Act had been quashed by the Tribunal vide its order passed in ITA....
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....3585/Mum/2016 vide order dated 11.01.2018); 3. D. D. Pharmaceutical (P.) Ltd. vs. Asst. CIT (in ITA No.772/JP/2014 vide order dated 12.12.2017); 4. Asst. CIT vs. M/s. Geno Pharmaceuticals Ltd. (in ITA No. 12/PNJ/2014 vide order dated 30.05.2014); 5. Ensure Pharmaceuticals Ltd. vs. DCIT (in ITA No.1532/Pun/2015 vide order dated 29.01.2018) " 14. Per Contra, the ld. Departmental Representative (ld. DR for short) relied upon the order's of the ld. CIT. He further relied upon the following case laws: "1. Bisakha Sales (P.) Ltd. vs. CIt [2014] 52 taxmann.com 205 (Kol - Trib); 2. CIT vs. Abad Constructions (P.) Ltd. [2014] 44 taxmann.com 319 (Kerala)" 15. Upon careful consideration, we note that the CBDT circular, the medical counsel of India guideline which dealt with disallowance of freebies to doctors have been duly considered by the A.O. The A.O. has elaborately dealt with these items and has rejected the assessee's contention to the contrary. Thereafter, the A.O. has made the disallowance of the sales promotion expenses. The case of the ld. CIT is that the A.O. has not examined the details of medical con....
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....sessee's own case the ITAT in ITA Nos. 5479 & 5747/Mum/2015 and others for A.Y. 2012 - 13 and others vide order dated 26.07.2018 has allowed the assessee's appeals and dismissed the Revenues appeals. The issue involved was the allowability of similar expenses. In this view of the matter, we find that admittedly the decision of tribunal is binding upon the A.O. Hence the order u/s. 263 of the Act by the ld. CIT will be of no consequence. Further, we note that the A.O. has already made the necessary enquiries in this regard. Here it is a case that the A.O. has made some enquiry and the ld. CIT is not satisfied and he wants another enquiry to be done. This direction u/s. 263 is not sustainable legally. This proposition draws support from the decision of the Hon'ble jurisdictional High Court in the case of CIT vs. Gabriel India Ltd. 203 ITR 108 (Bom-HC). 18. As regards the case law relied by the ld. Departmental Representative (ld. DR) in the case of Bisakha Sales (P.) Ltd. (supra) is concerned, we find that the same was rendered in connection with bogus capital share accepted as genuine without enquiry. Hence, the same is not at all applicable here. Simil....