2020 (12) TMI 848

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....pitals amounting to Rs. 10,76,256/-. 3. The facts in brief are that the assessee filed the return of income on 07.11.2014 declaring a total income of Rs. 6,74,68,500/- which was processed under section 143(1) of the Act. Thereafter the case of the assessee was selected for scrutiny and statutory notices were duly issued and served upon the assessee. It is pertinent to state that assessee is engaged in the business of manufacturing of pharmaceuticals and sales thereof. During the course of assessment proceedings, the AO noticed that assessee has debited sales promotion expenses in the profit & loss account which included Rs. 10,76,256/- on account of free samples and gifts to doctors and hospitals etc. Accordingly, a show cause notice was ....

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.... that the assessee is engaged in the business of manufacturing of pharmaceutical items and sales thereof. Since the assessee is in the business of pharmaceuticals, it is customary in the business of the assessee to incur sales promotion expenses on providing gifts, free samples to doctors, hospitals, medical association for arranging conferences and workshops for demonstrative purposes and also gifts given to customers, distributors, doctors and hospital staff and therefore in our opinion these expenses are clearly covered under the provision of section 37(1) of the Act as wholly and exclusively incurred for the purpose of business. The case of the assessee is squarely covered by the decisions of the co-ordinate bench of the Tribunal in the....