TaxTMI 
TaxTMI 
2022 (12) TMI 27
X X X X Extracts X X X X
X X X X Extracts X X X X
.... personal in nature are the following: i) Professional development expenses Rs.7,49,560/- ii) Advertisement expenses Rs.61,000/- iii) Telephone & Vehicle expenses Rs.20,000/- 3. The effective grounds raised by the assessee in this regard are as under: "2. The Learned Commissioner (Appeal) erred in confirming the disallowance of professional development expenditure of Rs.7,49,560/- are the invalid ground that said expenditure are of personal in nature and not allowable as deduction. 3. The Learned Commissioner (Appeal) erred in confirming the disallowance of Rs. 61,000/- being expenditure incurred for advertisement even though the same is incurred for professional purpose. 4. The Learned Commissioner (Appeal) erred in confirming the disallowance of Rs 20,000 as an personal expenses in spite assessee has maintained separate books of accounts for personal purpose and already disallowed telephone and petrol expenditure as per Audit report." 4. Vis-à-vis disallowance of professional development expenses of Rs.7,49,560/-, raised in Ground No.2 , the details of the same ,as noted in para-5 of the CIT(A)'s order, are as under: i) Musical programme expenditure R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nced his professional identity. Similar arguments were made for the expenditure incurred on garba event sponsored by the assessee. The contention of the assessee was that there were no personal benefits to the assessee by incurring this expenditure. It was further contended that the primary purpose for incurring this expenditure was to strengthen his professional net work and any incidental personal benefit was of no relevance while determining whether the claim was allowable to the assessee under the Income Tax Act. In this regard, he placed reliance on the decision of Hon'ble jurisdictional High Court in the case of CIT Vs. Khambhatta Family Trust, (2013) 34 taxmann.com 36 (Guj). He drew our attention to the head-note of the above decision containing gist of the aforesaid proposition of law laid down as under: Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of [Advertising expenses] - Whether once it is found that expenditure has been incurred by assessee for publicity or advertisement, it is not for department to consider what commercial expediency justify such expenditure; mere fact that on account of expenditure incurred by assessee wholly and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....said to have been incurred "wholly and exclusively" for the purpose of business of the assessee, and therefore, had been rightly disallowed by the authorities below. Submissions in this regard were filed before us which are reproduced as under: "It is respectfully submitted that giving gift to Doctor on marriage or otherwise would not lead to professional development of Dr.Keyur Parikh. The nature of such expenses is such that it cannot be linked directly with the professional development of any Doctor and especially Dr. Parikh who is a very well known doctor in Town. At best, it can be categorized as important social and religious aspect of being a social person having a position of Doctor. The Income Tax Act, 1961 do not contain any provision for allowing such expenses. The reliance is placed on the Drumant Hiralal Thakar vs. Commissioner of Income-tax, B.C. III [2015] 64 taxmann.com 177 (Bombay) wherein, it has been held that :- Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of (Personal Expenses/Medical expenses) - Assessment year 1986-87 - Whether expenditure on medical treatment of eyes is a personal expenditure and, it is not in nature o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....society where he lived and for medical circle and not for general public .No benefit could be said to accrue from these expenses therefore it was contended. The Ld.Counsel for the assessee responded by relying on the decision of ITAT, Ahmedabad Bench in the case of Sayaji Industries Ltd., 100 Taxman 110 (Ahd-ITAT) for the proposition that expenses incurred towards social obligations in respect of staff members during the course of business would be allowed as business expenditure. 10. The ld.DR countered by saying that the nature of expenditure incurred in the said case was different having been incurred by an assessee-company for its staff ,though by way of social obligation. The same was found to be for welfare of the staff and thus held to be allowable by the ITAT. 11. We have heard the rival contentions and gone through the orders of the authorities below. The issue to be adjudicated is whether expenses incurred by the assessee, a doctor by profession, on organizing musical programme for his professional colleagues, sponsoring garba event organized in the society where he resided and gifts given to fellow doctors on the occasion of marriage or diwali can be said to be allowa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....penses, cannot be said to have been incurred wholly and exclusively for the profession of the assessee so as to qualify for deduction u/s 37(1) of the Act. The case law relied on by the Ld.DR in the case of Dhimant Hiralal Thakkar(supra) applies squarely to the present case wherein expenses incurred on medical treatment of eyes of a solicitor was held to be personal in nature and not wholly and exclusively for the business/profession of the assessee while denying such claim. The decision relied on by the Ld.Counsel for the assessee in the case of Khambatta Family Trust (supra) we find is distinguishable as in the said case the proposition laid down by the Hon'ble Bombay High Court was that expenses incurred for the purposes of business cannot be disallowed merely because other parties incidentally derived benefit from the same. In the facts of the said case assessee had procured usage right for brand "Rasna" and incurred advertisement expenses for promoting the brand. Other parties were found to have benefited by the said expenses. The Hon'ble high court held in such facts that where expenditure was incurred wholly and exclusively for business of the assessee merely because other p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ical A physician shall not make use of hint / her (or his her name) as subject of any form or manner of advertising or publicity through any mode either aloneor in conjunction with others which is of such a character as to invite attention to him or to his professional position, skill appointments, associations, affliations or honours and/or of such character as would ordinarily result in his self aggrandizement A physician shall not give to any person, whether for compensation or otherwise, any approval, recommendation, endorsement, certificate, report or statement with respect of any drug. Medicine, nostrum remedy, surgical, or therapeutic article apparatus or appliance or any commercial product or article with respect of any property, quality or use thereof or any test, demonstration or trial thereof, for use in connection with his name, signature, or photograph in any form or manner of advertising through any mode nor shall he boast of cases, operations, cures or remedies or permit the publication of report thereof through any mode A medical practitioner is however permitted to make a formal announcement in press regarding the following:- 1) On starting practice 2) On cha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d by the assessee amounting to Rs.61,000/- are personal in nature and not incurred wholly and exclusively for the purpose of profession of the assessee and hence not allowable as per section 37(1) of the Act. 18. Even otherwise as rightly pointed out by the Ld.CIT(A) and the Ld.DR before us, advertising is an unethical act as per guidelines of the controlling body of medical professionals. For this reason also the expenses incurred on carrying out such unethical activities cannot be allowed as deduction. The order of the Ld.CIT(A) therefore upholding the disallowance of advertisement expenses of Rs.61,000/- is upheld. Ground of appeal No.3 is dismissed. 19. With respect to disallowance of expenses pertaining to telephone and vehicle expenditure, raised vide ground No.4, holding them to be personal in nature, the ld.counsel for the assessee pointed out that the AO had disallowed 20% of the telephone, vehicle, petrol, repairs and depreciation on vehicles, and professional expenses incurred by the assessee, which amounted in all of Rs.7,80,888/- holding the same as attributable to personal expenditure. Thus an amount of Rs 1,56,178/- was held to be disallowable. Further, noting th....