TaxTMI 
TaxTMI 
2022 (1) TMI 740
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....eutical Companies in view of Circular No.5 of 2012 as well as regulations framed by the Medical Council of India? (ii) In the light of Judgment of Himachal Pradesh High Court in the case of Confederation of Indian Pharmaceutical Industry (SSI) Vs. The Central Board of Direct Taxes (CBDT) and orders dated 26.12.2012, whether the Tribunal was justified in allowing the appeal of the assessee? 2. The facts giving rise to the aforesaid substantial questions of law are that the appellant is engaged in the business of manufacturing and trading of medicines. With regard to Assessment Year 2010-11 it was noted by the Assessing Officer that the appellant had debited an amount of Rs. 3,11,52,609/- towards tour and travel expenses. According to the ....
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....in hand and even if such expenses were incurred prior to 01.08.2012 the Assessee was not entitled for the deduction as claimed. Since it was not permissible for a medical practitioner to accept any travel facility or hospitality from pharmaceutical companies, the appellant which was a pharmaceutical company could not seek deduction of business expenditure in that regard. The learned counsel referred to the judgment of the Himachal Pradesh High Court dated 26.12.2012 in CWP No.10793 of 2012-J [Confederation of Indian Pharmaceutical Industry (SSI) Versus The Central Board of Direct Taxes (CBDT) & Another] in that regard. He further placed reliance on the decisions in Overseas Trading & Shipping Co.(P) Ltd. Versus Assistant Commissioner of In....
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.... incurring expenditure towards tour and travel of medical practitioners. The said regulations were binding only on medical practitioners and not on persons who were not governed by the Indian Medical Council Act, 1956 (for short, the Act of 1956'). Without prejudice to aforesaid it was submitted that Circular No.5 of 2012 having been issued on 01.08.2012 it would apply prospectively and would have no retrospective effect. Since the expenditure in question pertained to Assessment Year 2010-11 it was not open for the Revenue to rely upon that Circular. It was further submitted that various Tribunals in the State had taken a consistent view that Circular No.5 of 2012 would not be applicable to pharmaceutical companies and the Revenue had acce....
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....Professional Conduct, Etiquette and Ethics) Regulations 2002 as amended on 10.12.2009 is required to be considered. As per these regulations the Medical Council of India imposed a prohibition on medical practitioners and their professional associations from taking any gift, travel facility, hospitality, cash or monetary grant from pharmaceutical and allied health sector industries. As per Circular No.5 of 2012 dated 01.08.2012 claim of any expense incurred in providing the aforesaid or similar freebees in violation of the provisions of the said regulations were held inadmissible under Section 37(1) of the Act of 1961 being an expense prohibited in law. It was further stated that such dis-allowance would be made in the hands of such pharmac....
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....of the Tribunal were not assailed before the High Court has not been countered by the Revenue. While holding that C.B.D.T. Circular No.5 of 2012 which creates a burden or liability or imposes a new kind of imparity has thus to be applied prospectively, reliance has been placed by the Tribunal on the decision of the Hon'ble Supreme Court in Director of Income Tax Versus SRMB Dairy Farming Pvt. Ltd. [(2018) 400 ITR 9 (SC)]. It has been held therein that while beneficial circulars have to be applied retrospectively, oppressive circulars would have prospective application. In view of this it is clear that C.B.D.T. Circular No.5 of 2012 imposes a new kind of imparity and thus the view taken in the aforesaid decisions by the Tribunal is in conso....