ARISTO PHARMACEUTICALS PRIVATE LIMITED, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX - CIRCLE 2(1)(1), MUMBAI

ITA 1104/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8966 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 26-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANADI VARMA LD; V VINOD KUMAR LD
• Assessee Lawyers: AJAY KUMAR RASTOGI LD
• Keywords: Gift; Business income; Business expenditure; Opportunity of being heard; Principle of natural justice; Retrospective amendment; Competent authority; Revenue expenditure; Capital expenditure; Set aside
• Section: 143(3); 115JB; 37(1); 201; 143(2); 43; 13; 37; 263

Judgement Text

M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.1104/MUM/2018 ( / ASSESSMENT YEAR:2014-15 ) M/S. ARISTO PHARMACEUTICALS P VT. LTD. MERCANTILE CHAMBERS, 3 RD FLOOR 12, N.J. HEREDIA MARG BALLARD ESTATE, MUMBAI-400 001. / VS. D CIT - 2 (1)(1) 5 TH FLOOR AAYKAR BHAVAN MUMBAI-400 020. ! ./ ! ./PAN/GIR NO. AAACA-4495-N ( '# /APPELLANT ) : ( $%'# / RESPONDENT ) & ./ I.T.A. NO.1972/MUM/2018 ( / ASSESSMENT YEAR:2014-15 ) D CIT - 2 (1)(1) 5 TH FLOOR AAYKAR BHAVAN MUMBAI-400 020. / VS. M/S. ARISTO PHARMACEUTICALS PVT. LTD. MERCANTILE CHAMBERS, 3 RD FLOOR 12, N.J. HEREDIA MARG BALLARD ESTATE, MUMBAI-400 001. ! ./ ! ./PAN/GIR NO. AAACA-4495-N ( '# /APPELLANT ) : ( $%'# / RESPONDENT ) A SSESSEE BY : SHRI AJAY KUMAR RASTOGI- LD. AR REVENUE BY : SHRI ANADI VARMA - LD.CIT-DR & SHRI V.VINOD KUMAR-LD.DR / DATE OF HEARING : 06/12/2019 / DATE OF PRONOUNCEMENT : 15/01/2020 M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 2 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) :- 1. AFORESAID CROSS-APPEALS FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2014-15 CONTEST THE ORDER OF LD. COMMISSIO NER OF INCOME-TAX (APPEALS)-4, MUMBAI, [IN SHORT REFERRED TO AS CIT( A)], APPEAL NO. CIT(A)-4/IT-268/DCIT-2(1)(1) DATED 15/01/2018. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: - 1. FOR THAT THE LD. CIT(A) HAS ERRED IN SUSTAINI NG DISALLOWANCE OF RS.1,04,96,044/- BEING EXPENDITURE INCURRED ON 'SALES PROMOTION ARTI CLES'. 2. FOR THAT THE LD. CIT(A) HAS ERRED IN FIXING T HE LIMIT OF GIFT ARTICLES EXCEEDING THE COST OF RS.750/- EACH WHILE SUSTAINING DISALLOWANCE OF R S.1,04,96,044/-. 3. FOR THAT THE LD. CIT(A) HAS ERRED IN SUSTAININ G DISALLOWANCE OF RS.23,63,65,631/- BEING EXPENDITURE INCURRED AND DEBITED UNDER THE HE AD 'MEDICAL CONFERENCE EXPENSE. 4. FOR THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE REGULATIONS DATED 11/03/2002 AND 10/12/2009 ISSUED BY MCI WOULD FALL WITHIN THE MEANING OF 'DELEGATED LEGISLATION AND HENCE THE SAME IS 'LAW' AND DOES N OT REQUIRE SPECIFIC LEGISLATION BY THE LEGISLATURE AND ITS ACCENT BY THE HON'BLE PRESI DENT OF INDIA. 5. FOR THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE REGULATIONS ISSUED BY MCI HAVE ALL THE TENETS OF A VALID LAW BEING A 'DELEGATED LE GISLATION AND IS REQUIRED TO BE IMPLEMENTED AS SUCH. 6. FOR THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT EXPENDITURE INCURRED IN VIOLATION OF SUCH REGULATION BY ANYONE WOULD CONSTITUTE AN OFFEN CE AND IS PROHIBITED BY LAW AND AS SUCH THE EXPENDITURE WOULD BE HIT BY EXPLANATION TO SECTION 37(1). 7. FOR THAT THE LD. CIT(A) HAS ERRED IN HOLDING T HAT THE ABSENCE OF PUNISHMENT TO ENTITIES OTHER THAN MEDICAL PRACTITIONER CANNOT BE A GROUND FOR NOT HOLDING SUCH EXPENDITURE AS OFFENCE AND/OR PROHIBITED BY LAW IN THE HANDS OF ENTITY INCURRING THE EXPENSE. 8. FOR THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT WHEN THE RECEIPT OF FREEBIES IS AN OFFENCE AND/OR PROHIBITED BY LAW IN THE HANDS OF DO CTORS, THE PAYMENT THEREOF BY THE PAYER AS A NECESSARY COROLLARY WILL BE AN OFFENCE W HICH IS PROHIBITED BY LAW. 9. FOR THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE CONTENTION OF THE APPELLANT THAT MCI IS NOT THE REGULATORY AUTHORITY CANNOT BE ACCEP TED IN VIEW OF JUDGMENT OF THE HON'BLE HIMACHAL PRADESH HIGH COURT WHEREIN THE VAL IDITY OF CIRCULAR NO.5/2012 HAS BEEN UPHELD. 10. FOR THAT THE LD. CIT (A) HAS FAILED TO APPRECI ATE THAT THE REGULATIONS ISSUED BY MCI ARE NOT 'LAW' AND THAT MCI IS NOT A REGULATORY AUTH ORITY FOR THE APPELLANT. 11. FOR THAT THE LD. CIT(A) HAS ERRED IN NOT FOLLO WING THE ORDERS OF ITAT, MUMBAI BENCH IN THE CASE OF PHL PHARMA LTD. IN ITA NO.4605/ MUMB AI/2014. M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 3 12. FOR THAT THE LD. CIT(A) HAS ERRED HAS ERRED IN HOLDING THAT THE ORDER OF HON'BLE TRIBUNAL CANNOT BE BLINDLY APPLIED IN VIEW OF DECIS ION OF THE HON'BLE HIMACHAL PRADESH HIGH COURT. 13. FOR THAT THE LD. CIT(A) HAS ERRED HAS ERRED IN HOLDING THAT SINCE THE EXPENDITURE INCURRED IS IN VIOLATION OF REGULATIONS FRAMED BY M CI AND, THEREFORE, THE SAME IS NOT AN ALLOWABLE DEDUCTION. 14. FOR THAT THE LD. CIT(A) HAS ERRED IN HOLDING T HAT THE ITAT, MUMBAI BENCH HAD NO OCCASION TO CONSIDER THAT THE REGULATIONS HAVE BEEN ISSUED BY MCI IN EXERCISE OF POWER U/S 33 OF THE MCI ACT, 1956 BY FOLLOWING PROP ER PROCEDURE AND MANDATE OF LAW AND ACCORDINGLY WOULD COME WITHIN THE AMBIT OF 'DELEGATED LEGISLATION' AND VIOLATION THEREOF WOULD BE HIT BY EXPLANATION TO SE CTION 37. 15. FOR THAT THE LD. CIT(A) HAS ERRED IN HOLDING T HAT THE DECISION OF THE ITAT IN ITS ENTIRETY IS NOT APPLICABLE TO THE APPELLANT'S CASE. 16. FOR THAT THE LD. CIT(A) HAS ERRED IN IGNORING THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF MAX HOSPITAL. 17. FOR THAT THE SUSTENANCE OF DISALLOWANCE OF RS. 1,04,96,044/- AND RS.23,63,65,631/- ARE WRONG, ILLEGAL AND UNJUSTIFIED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 18. FOR THAT THE WHOLE ORDER IS BAD IN FACTS AND L AW OF THE CASE AND IS FIT TO BE MODIFIED. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IM PUGNED IN THE GROUNDS ENUMERATED BELOW: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF SALES PROMOTION EXPENS ES OF RS.13,93,11,578/- WITHOUT CONSIDERING CIRCULAR NO. 5/2012 (F.NO. 225/142/2012 -ITA.II) DATED 01.08.2012. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF SALES PROMOTION EXPENS ES OF RS.13,93,11,578/- WITHOUT APPRECIATING THE FACT THAT THE EXPENDITURE WAS INCU RRED FOR PROVIDING FREEBIES TO MEDICAL PRACTITIONERS AND THEIR PROFESSIONAL ASSOCI ATES IN VIOLATION OF REGULATION ISSUED BY MEDICAL COUNCIL OF INDIA.' 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING, THE DECISION OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO B E RESTORED. 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE IS STATED TO BE ENGAGED IN MANUF ACTURING AND SALE OF PHARMACEUTICALS AND ALLIED PRODUCTS. THE ASSESSMENT FOR YEAR UNDER CONSIDERATION WAS FRAMED U/S 143(3) ON 28/12/2016 W HEREIN THE ASSESSEE WAS SADDLED WITH DISALLOWANCE OF EXPENDITU RE ON SALES PROMOTIONAL ARTICLES FOR RS.1498.07 LACS AND DISALL OWANCE OF MEDIAL M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 4 CONFERENCE EXPENDITURE FOR RS.2363.65 LACS, WHILE C OMPUTING ITS INCOME. 2.2 THE PERUSAL OF PARA 5.1 OF THE QUANTUM ASSESSME NT ORDER WOULD REVEAL THAT EXPENDITURE ON SALES PROMOTIONAL ARTICL ES REPRESENT COST OF GIFT ARTICLES WHICH ARE STATED TO BE DISTRIBUTED AM ONGST DOCTORS, STOCKIEST, AND CHEMISTS THROUGH ASSESSEES MEDICAL REPRESENTAT IVE AND ALSO BY WAY OF DISTRIBUTION DURING MEDICAL CAMPS CONDUCTED BY THE ASSESSEE FROM TIME TO TIME. THE EXPENDITURE ON GIFT ARTICLES HAVING A VALUE OF MORE THAN RS.750/- PER ARTICLE AGGREGATED TO RS.104.96 L ACS OUT OF TOTAL EXPENDITURE OF RS.1498.07 LACS. DURING ASSESSMENT P ROCEEDINGS, IT WAS POINTED OUT BY THE ASSESSEE THAT SUBSTANTIAL RELIEF WAS GRANTED, ON THIS ACCOUNT, BY FIRST APPELLATE AUTHORITY FOR AYS 2011- 12 & 2012-13 AND THE CROSS-APPEALS WERE PENDING BEFORE THE TRIBUNAL. HOWEVER, FOLLOWING CONSISTENT STAND TAKEN BY DEPART MENT IN AYS 2011- 12 TO 2013-14, THE ENTIRE EXPENDITURE OF RS.1498.07 LACS WAS DISALLOWED BY LD. AO AND ADDED BACK TO THE INCOME OF THE ASSES SEE. 2.3 THE MEDICAL CONFERENCE EXPENDITURE OF RS.2363.6 5 LACS, AS PER ASSESSEES SUBMISSIONS DATED 20/12/2016, REPRESENTE D REGISTRATION FEES DIRECTLY PAID TO ORGANIZERS FOR DOCTORS ATTEND ING THE CONFERENCES, TRAVELLING EXPENSES OF DOCTORS FOR ATTENDING CONFER ENCES, STAY CHARGES FOR ATTENDING CONFERENCES, FOOD EXPENDITURE DURING CONFERENCES, EXPENDITURE ON STALL AND OTHER ACTIVITY, EXPENDITUR E ON HOLDING MEDICAL CAMPS FOR DETECTION AND AWARENESS OF DISEASES AND E XPENDITURE ON DISTRIBUTION OF GIFT ARTICLES ETC. THE HEAD-WISE BR EAK-UP OF THE EXPENDITURE HAS ALREADY BEEN TABULATED IN PARA 6.2 OF THE QUANT UM ASSESSMENT ORDER. M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 5 2.4 IN DEFENSE OF ALLOWABILITY OF MEDICAL CONFERENC E EXPENDITURE, THE ASSESSEE SUBMITTED THAT THE STATED EXPENDITURE UNDE R VARIOUS HEADS WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ASSESSEES BUSINESS AND THEREFORE, THE SAME WAS AN ALLOWABLE D EDUCTION. HOWEVER, KEEPING IN VIEW OF THE NATURE OF EXPENDITURE, LD. A O FORMED AN OPINION THAT THE EXPENDITURE WAS INCURRED IN VIOLATION OF M EDICAL COUNCIL OF INDIA NOTIFICATION DATED 10/12/2009 AMENDING THE INDIAN M EDICAL COUNCIL (PROFESSIONAL CONDUCT, ETIQUETTE AND ETHICS) REGULA TIONS, 2002 AND THEREFORE, INVOKING EXPLANATION TO SECTION 37(1) AN D APPLYING THE SAME REASONING AS APPLIED WHILE DISALLOWING THE EXPENDIT URE ON SALES PROMOTIONAL ARTICLES, THE SAID EXPENDITURE OF RS.23 63.65 LACS WAS ALSO DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSE SSEE. 3.1 AGGRIEVED, THE ASSESSEE CONTESTED BOTH THE DISA LLOWANCES BEFORE LEARNED FIRST APPELLATE AUTHORITY. WITH RESPECT TO DISALLOWANCE OF SALES PROMOTION EXPENDITURE, THE ATTENTION WAS DRAWN TO A PPELLATE ORDERS FOR AYS 2011-12 & 2012-13 WHEREIN THE ASSESSEE WAS SADD LED WITH SIMILAR DISALLOWANCES BY LD. AO. HOWEVER, UPON FURTHER APPE AL, LD. CIT(A) ALLOWED EXPENDITURE ON GIFT ARTICLES COSTING LESS T HAN RS.750/- PER ARTICLE BUT CONFIRMED DISALLOWANCE ON GIFT ARTICLES COSTING MORE THAN RS.750/- PER ARTICLE. AT THE SAME TIME, RELIANCE WAS PLACED ON VARIOUS JUDICIAL PRONOUNCEMENTS TO SUPPORT THE ARGUMENT THAT THE MCI GUIDELINES / NOTIFICATIONS / REGULATIONS WERE NOT APPLICABLE TO PHARMA COMPANIES AND THE EXPENDITURE WAS AN ALLOWABLE DEDUCTION. ASSAIL ING CBDT CIRCULAR NO.05/2012 DATED 01/08/2012, IT WAS SUBMITTED THAT CBDT HAD NO POWER TO LEVY TAX THROUGH CIRCULAR / NOTIFICATION AND COU LD NOT TERM PARTICULAR M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 6 EXPENDITURE TO BE PROHIBITED BY LAW OR TO BE AN OFF ENCE. IT WAS PLEADED THAT THE CIRCULAR COULD NOT OVERRIDE THE SUBSTANTIV E PROVISION OF THE ACT. 3.2 THE LD. CIT(A), RELYING UPON THE APPELLATE ORDE R FOR AY 2011-12, DIRECTED LD.AO TO RESTRICT THE DISALLOWANCE ON ACCO UNT OF SALE PROMOTION EXPENDITURE TO RS.104.96 LACS, BEING EXPENDITURE ON GIFT ARTICLE EACH COSTING MORE THAN RS.750/- PER ARTICLE AND GRANTED RELIEF OF RS.1393.11 LACS, BEING EXPENDITURE ON GIFT ARTICLES WHERE COST OF EACH ARTICLES DID NOT EXCEED RS.750/- PER ARTICLE. AGGRIEVED, THE ASS ESSEE AS WELL AS REVENUE IS UNDER APPEAL BEFORE US, ON THIS ISSUE. 3.3 REGARDING MEDICAL CONFERENCE EXPENDITURE, THE A TTENTION WAS DRAWN TO THE FACT THAT SINCE BOTH THE DISALLOWANCES WERE MADE ON SIMILAR REASONING, THE ASSESSEES DEFENSE AS MADE FOR DISAL LOWANCE OF SALE PROMOTION EXPENDITURE WOULD EQUALLY APPLY TO THIS D ISALLOWANCE ALSO. RELIANCE WAS ALSO PLACED ON THE FAVORABLE DECISION OF MUMBAI TRIBUNAL RENDERED IN DCIT V/S PHL PHARMA LIMITED (ITA NO. 4605/MUM/2014 ORDER DATED 12/01/2017) STATED TO BE RENDERED UNDER SIMILAR FACTUAL MATRIX. 3.4 HOWEVER, NOT CONVINCED, LD. CIT(A) REJECTED VAR IOUS PLEAS RAISED BY THE ASSESSEE, INTER-ALIA, BY OBSERVING THAT THE ASSESSEE WAS NOT ABLE TO SATISFY ASSESSING OFFICER THAT THE EXPENDITURE W AS NOT IN VIOLATION OF REGULATIONS FRAMED BY MCI. IT WAS ALSO OBSERVED THA T THE CITED DECISION OF MUMBAI TRIBUNAL DID NOT CONSIDER THE ASPECT THAT WHEN THE REGULATIONS WERE ISSUED U/S 33 OF INDIAN MEDICAL COUNCIL ACT, 1 956 BY COMPETENT AUTHORITY AS PER PROPER PROCEDURE AND MANDATE OF LA W, THE SAME WOULD CONSTITUTE DELEGATED LEGISLATION AND THEREFORE, THE VIOLATION OF THE SAME WOULD BE HIT BY EXPLANATION TO SECTION 37(1). FINAL LY, THE SAID M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 7 DISALLOWANCE WAS CONFIRMED. AGGRIEVED, THE ASSESSEE IS UNDER FURTHER APPEAL BEFORE US. 4.1 WE HAVE CAREFULLY HEARD RIVAL SUBMISSIONS AND P ERUSED RELEVANT MATERIAL ON RECORD INCLUDING DOCUMENTS PLACED IN TH E PAPER-BOOK AND DELIBERATED ON VARIOUS JUDICIAL PRONOUNCEMENTS AS C ITED BY BOTH THE REPRESENTATIVES INCLUDING DECISIONS RENDERED BY TRI BUNAL IN ASSESSEES OWN CASE FOR EARLIER YEARS. THE LEARNED SR. COUNSEL , REPRESENTING ASSESSEE, SUBMITTED THAT THE ISSUE OF DISALLOWANCE OF SALES PROMOTION EXPENDITURE STOOD SQUARELY COVERED IN ASSESSEES FA VOR BY THE EARLIER ORDERS OF TRIBUNAL ITA NOS. 6680/MUM/2012 & OTHERS FOR AYS 2009-10, 2011-12 & 2012-13 COMMON ORDER DATED 26/07/2018 WHI CH HAS SUBSEQUENTLY BEEN FOLLOWED BY TRIBUNAL IN AY 2013-1 4, ITA NO.5807/MUM/2017 ORDER DATED 28/06/2019. THE COPIES OF ORDERS HAVE ALREADY BEEN PLACED ON RECORD, WHICH WE HAVE CONSID ERED. 4.2 IT IS EVIDENT FROM THE QUANTUM ASSESSMENT ORDER THAT LD.AO HAS PRIMARILY GONE BY THE STAND TAKEN BY REVENUE IN EAR LIER AYS 2011-12 TO 2013-14 WHILE MAKING THE IMPUGNED DISALLOWANCE. THE LEARNED FIRST AUTHORITY ALSO GRANTED PARTIAL RELIEF TO THE ASSESS EE BY FOLLOWING APPELLATE ORDERS OF EARLIER YEARS, WHICH FORMED SUBJECT MATTE R OF CROSS-APPEALS BEFORE THIS TRIBUNAL IN AYS 2011-12 & 2012-13. THE ISSUE OF ALLOWABILITY OF EXPENDITURE ON SALES PROMOTION ARTICLES U/S 37(1 ) AS WELL AS IN THE LIGHT OF CIRCULAR ISSUED BY CBDT / MCI WAS SUBJECT MATTER OF ELABORATE DELIBERATIONS BY THE CO-ORDINATE BENCH IN ASSESSEE' S OWN CASE FOR AYS 2011-12 & 2012-13, WHEREIN THE ISSUE WAS CONCLUDED IN ASSESSEES FAVOR. THE OPERATIVE PORTION OF THE DECISION, FOR E ASE OF REFERENCE, COULD BE EXTRACTED IN THE FOLLOWING MANNER: - M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 8 '21. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UND ER CONSIDERATION AND AFTER PERUSING THE REGULATIONS ISSUED BY THE MEDICAL COUNCIL OF INDIA, FIND THAT THE SAME LAYS DOWN THE CODE OF CONDUCT IN RESPECT OF THE DOCTORS AND OTHER MEDICAL PROFESSIONALS REGISTERED WITH IT, AND ARE NOT APPLICABLE TO THE PHARMACEUTICALS OR ALLIED HEALTH SECTOR INDUSTRIES. RATHER, A PERUSAL OF THE PROVISIONS OF THE INDIAN MEDICAL COUNCIL ACT, 1956, REVEALS THAT THE SCOPE AND AMBIT OF STATUTORY PROVISIONS RELATING TO PROFESSIONAL CONDU CT OF REGISTERED MEDICAL PRACTITIONERS UNDER THE INDIAN MEDICAL COUNCIL ACT, 1956 IS RESTRICTED ONLY TO THE PERSONS REGISTERED AS MEDICAL PRACTITIONERS WITH THE STATE MEDICAL COUNCIL AND WH OSE NAME ARE ENTERED IN THE INDIAN MEDICAL REGISTER MAINTAINED UNDER SEC. 21 OF THE SAID ACT. WE ARE OF THE CONSIDERED VIEW THAT THE SCHEME OF THE INDIAN MEDICAL COUNCIL ACT, 1956 NEIT HER DEALS WITH NOR PROVIDES FOR ANY CONDUCT OF ANY ASSOCIATION/SOCIETY AND DEALS ONLY W ITH THE CONDUCT OF INDIVIDUAL REGISTERED MEDICAL PRACTITIONERS. IN THE BACKDROP OF THE AFORE SAID FACTS, IT EMERGES THAT THE APPLICABILITY OF THE MCI REGULATIONS WOULD ONLY COVER INDIVIDUAL MED ICAL PRACTITIONERS AND NOT THE PHARMACEUTICAL COMPANIES OR ALLIED HEALTH SECTOR IN DUSTRIES. INTERESTINGLY, THE SCOPE OF THE APPLICABILITY OF THE MCI REGULATIONS WAS LOOKED INT O BY THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF MAX HOSPITAL, PITAMPURA V. MEDICAL COUNCIL OF INDIA (CWP NO. 1334/2013, DATED 10.01.2014). IN THE AFOREMENTIONED CASE THE MCI HAD FILED AN 'AFFIDAVIT' BEFORE THE HIGH COURT, WHEREIN IT WAS DEPOSED BY THE COUNCIL THAT ITS JURI SDICTION IS LIMITED ONLY TO TAKE ACTION AGAINST THE REGISTERED MEDICAL PROFESSIONALS UNDER THE INDI AN MEDICAL COUNCIL (PROFESSIONAL CONDUCT, ETIQUETTE AND ETHICS) REGULATIONS, 2002, AND IT HAS NO JURISDICTION TO PASS ANY ORDER AFFECTING THE RIGHTS/INTEREST OF THE PETITIONER HOSPITAL. WE ARE OF THE CONSIDERED VIEW THAT ON THE BASIS OF THE AFORESAID DEPOSITION OF MCI THAT ITS JURISDICTI ON STANDS RESTRICTED TO THE REGISTERED MEDICAL PROFESSIONALS, IT CAN SAFELY BE CONCLUDED THAT THE MCI REGULATIONS WOULD IN NO WAY IMPINGE ON THE FUNCTIONING OF THE ASSESSEE-COMPANY WHICH IS EN GAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF PHARMACEUTICAL AND ALLIED PRODUCTS. WE THUS , IN THE BACKDROP OF OUR AFORESAID DELIBERATIONS ARE OF THE CONSIDERED VIEW THAT THE C ODE OF CONDUCT ENSHRINED IN THE MCI REGULATIONS ARE SOLELY MEANT TO BE FOLLOWED AND ADH ERED BY MEDICAL PRACTITIONERS/DOCTORS, AND SUCH A REGULATION OR CODE OF CONDUCT WOULD NOT COVE R THE PHARMACEUTICAL COMPANY OR HEALTHCARE SECTOR IN ANY MANNER. WE ARE FURTHER OF THE VIEW TH AT IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS, AS THE MEDICAL COUNCIL OF INDIA DOES NOT HAVE ANY JURISDICTION UNDER LAW TO PASS ANY ORDER OR REGULATION AGAINST ANY HOSPITAL, PHARM ACEUTICAL COMPANY OR ANY HEALTHCARE SECTOR, THEN ANY SUCH REGULATION ISSUED BY IT CANNOT HAVE A NY PROHIBITORY EFFECT ON THE MANNER IN WHICH THE PHARMACEUTICAL COMPANY LIKE THE ASSESSEE CONDUC TS ITS BUSINESS. ON THE BASIS OF OUR AFORESAID OBSERVATIONS, WE ARE UNABLE TO COMPREHEND THAT NOW WHEN THE MCI HAS NO JURISDICTION UPON THE PHARMACEUTICAL COMPANIES, THE N WHERE COULD THERE BE AN OCCASION FOR CONCLUDING THAT THE ASSESSEE-COMPANY HAD VIOLATED A NY REGULATION ISSUED BY MCI. WE THUS, IN TERMS OF OUR AFORESAID OBSERVATIONS ARE OF THE CONS IDERED VIEW THAT EVEN IF THE ASSESSEE HAD INCURRED EXPENDITURE ON DISTRIBUTION OF 'FREEBIES' TO DOCTORS AND MEDICAL PRACTITIONERS, THE SAME THOUGH MAY NOT BE IN CONFORMITY WITH THE INDIAN MED ICAL COUNCIL (PROFESSIONAL CONDUCT, ETIQUETTE AND ETHICS) REGULATIONS, 2002 (AS AMENDED ON 10.12.2009), HOWEVER, AS THE SAME ONLY REGULATES THE CODE OF CONDUCT OF THE MEDICAL P RACTITIONERS/DOCTORS, THEREFORE, IN THE ABSENCE OF ANY PROHIBITION ON THE PHARMACEUTICAL COMPANIES IN INCURRING OF SUCH SALES PROMOTION EXPENSES, THE LATTER CANNOT BE HELD TO HAVE INCURRE D AN EXPENDITURE FOR A PURPOSE WHICH IS AN OFFENCE OR IS PROHIBITED BY LAW. IN THIS REGARD WE ARE REMINDED OF THE MAXIM ' EXPRESSIO UNIUS EST EXCLUSIO ALTERIUS ', WHICH PROVIDES THAT IF A PARTICULAR EXPRESSION I N THE STATUTE IS EXPRESSLY STATED FOR A PARTICULAR CLASS OF ASSESSEE, THEN BY IMPLICATION WHAT HAS NOT BEEN STATED OR EXPRESSED IN THE STATUTE HAS TO BE EXCLUDED FOR OTH ER CLASS OF ASSESSES. THUS, NOW WHEN THE MCI REGULATIONS ARE APPLICABLE TO MEDICAL PRACTITIONERS REGISTERED WITH THE MCI, THEN THE SAME CANNOT BE MADE APPLICABLE TO PHARMACEUTICAL COMPANI ES OR OTHER ALLIED HEALTHCARE COMPANIES. M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 9 22. WE SHALL NOW ADVERT TO THE CBDT CIRCULAR NO. 5/ 2012, DATED 01.08.2012. WE FIND THAT THE AFORESAID CBDT CIRCULAR READS AS UNDER: 'INADMISSIBILITY OF EXPENSES INCURRED IN PROVIDING FREEBEES TO MEDICAL PRACTITIONER BY PHARMACEUTICAL AND ALLIED HEALTH SECTOR INDUSTRY CIRCULAR NO. 5/2012 [F.NO. 225/142/2012-ITA.II], DA TED 1-8-2012 IT HAS BEEN BROUGHT TO THE NOTICE OF THE BOARD THAT SOME PHARMACEUTICAL AND ALLIED HEALTH SECTOR INDUSTRIES ARE PROVIDING FREEBESS (FREEBIES) TO MEDICAL PRACTITIONER AND THEIR PROFESSIONAL ASSOCIATIONS IN VIOLATION OF THE REGUL ATIONS ISSUED BY MEDICAL COUNCIL OF INDIA (THE 'COUNCIL') WHICH IS A REGULATORY BODY CONSTITUTED U NDER THE MEDICAL COUNCIL ACT, 1956 2. THE COUNCIL IN EXERCISE OF ITS STATUTORY POWERS AMENDED THE INDIAN MEDICAL COUNCIL (PROFESSIONAL CONDUCT, ETIQUETTE AND ETHICS) REGULA TIONS, 2002 (THE REGULATIONS) ON 10-12- 2009 IMPOSING A PROHIBITION ON THE MEDICAL PRACTITI ONER AND THEIR PROFESSIONAL ASSOCIATIONS FROM TAKING ANY GIFT, TRAVEL FACILITY, HOSPITALITY, CASH OR MONETARY GRANT FROM THE PHARMACEUTICAL AND ALLIED HEALTH SECTOR INDUSTRIES. 3. SECTION 37(1) OF INCOME TAX ACT PROVIDES FOR DED UCTION OF ANY REVENUE EXPENDITURE (OTHER THAN THOSE FAILING UNDER SECTIONS 30 TO 36) FROM TH E BUSINESS INCOME IF SUCH EXPENSE IS LAID OUT/EXPENDED WHOLLY OR EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSION. HOWEVER, THE EXPLANATION APPENDED TO THIS SUB-SECTION DENIES CLA IM OF ANY SUCH EXPENSES, IF THE SAME HAS BEEN INCURRED FOR A PURPOSE WHICH IS EITHER AN OFFE NCE OR PROHIBITED BY LAW. THUS, THE CLAIM OF ANY EXPENSE INCURRED IN PROVIDIN G ABOVE MENTIONED OR SIMILAR FREEBEES IN VIOLATION OF THE PROVISIONS OF INDIAN MEDICAL COUNC IL (PROFESSIONAL CONDUCT, ETIQUETTE AND ETHICS) REGULATIONS, 2002 SHALL BE INADMISSIBLE UND ER SECTION 37(1) OF THE INCOME TAX ACT BEING AN EXPENSE PROHIBITED BY THE LAW. THIS DISALL OWANCE SHALL BE MADE IN THE HANDS OF SUCH PHARMACEUTICAL OR ALLIED HEALTH SECTOR INDUSTRIES O R OTHER ASSESSEE WHICH HAS PROVIDED AFORESAID FREEBEES AND CLAIMED IT AS A DEDUCTIBLE E XPENSE IN ITS ACCOUNTS AGAINST INCOME. 4. IT IS ALSO CLARIFIED THAT THE SUM EQUIVALENT TO VALUE OF FREEBEES ENJOYED BY THE AFORESAID MEDICAL PRACTITIONER OR PROFESSIONAL ASSOCIATIONS I S ALSO TAXABLE AS BUSINESS INCOME OR INCOME FROM OTHER SOURCES AS THE CASE MAY BE DEPENDING ON THE FACTS OF EACH CASE. THE ASSESSING OFFICERS OF SUCH MEDICAL PRACTITIONER OR PROFESSION AL ASSOCIATIONS SHOULD EXAMINE THE SAME AND TAKE AN APPROPRIATE ACTION. THIS MAY BE BROUGHT TO THE NOTICE OF ALL THE OFFICE RS OF THE CHARGE FOR NECESSARY ACTION.' WE MAY HEREIN OBSERVE THAT A PERUSAL OF THE AFORESA ID CBDT CIRCULAR REVEALS THAT THE 'FREEBIES' PROVIDED BY THE PHARMACEUTICAL COMPANIES OR ALLIED HEALTH SECTOR INDUSTRIES TO MEDICAL PRACTITIONERS OR THEIR PROFESSIONAL ASSOCIATIONS IN VIOLATION OF THE PROVISIONS OF INDIAN MEDICAL COUNCIL (PROFESSIONAL CONDUCT, ETIQUETTE AND ETHICS ) REGULATIONS, 2002 SHALL BE INADMISSIBLE UNDER SEC. 37(1) OF THE INCOME-TAX ACT, 1961, AS TH E SAME WOULD BE AN EXPENSE PROHIBITED BY THE LAW. WE ARE OF THE CONSIDERED VIEW THAT AS OBSE RVED BY US HEREINABOVE, THE CODE OF CONDUCT ENSHRINED IN THE NOTIFICATIONS ISSUED BY MCI THOUGH IS TO BE STRICTLY FOLLOWED AND ADHERED BY MEDICAL PRACTITIONERS/DOCTORS REGISTERED WITH THE M CI, HOWEVER THE SAME CANNOT IMPINGE ON THE CONDUCT OF THE PHARMACEUTICAL COMPANIES OR OTHER HE ALTHCARE SECTOR IN ANY MANNER. WE FIND THAT NOTHING HAS BROUGHT ON RECORD WHICH COULD PERSUADE US TO CONCLUDE THAT THE REGULATIONS OR NOTIFICATIONS ISSUED BY MCI WOULD AS PER THE LAW AL SO BE BINDING ON THE PHARMACEUTICAL COMPANIES OR OTHER ALLIED HEALTHCARE SECTOR. RATHER , THE CONCESSION MADE BY THE MCI BEFORE THE M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 10 HON'BLE HIGH COURT OF DELHI IN THE CASE OF MAX HOSPITAL V. MCI (CWP NO. 1334/2013, DATED 10.01.2014) FORTIFIES OUR AFORESAID VIEW THAT MCI H AS NO JURISDICTION TO PASS ANY ORDER OR REGULATION AGAINST ANY HOSPITAL, PHARMACEUTICAL COM PANY OR ANY HEALTHCARE SECTOR. WE FURTHER FIND THAT MCI HAD BY ADDING PARA 6.8.1 TO ITS EARLI ER NOTIFICATION ISSUED AS 'INDIAN MEDICAL COUNCIL PROFESSIONAL (CONDUCT, ETIQUETTE AND ETHICS ) REGULATIONS, 2002' HAD EVEN PROVIDED FOR ACTION WHICH SHALL BE TAKEN AGAINST MEDICAL PRACTIT IONERS IN CASE THEY CONTRAVENE THE PROHIBITIONS PLACED ON THEM. WE FIND FROM A PERUSAL OF PARA 6.8.1 THAT IN CASE OF RECEIVING OF ANY GIFT FROM ANY PHARMACEUTICAL OR ALLIED HEALTHCA RE INDUSTRY AND THEIR SALES PEOPLE OR REPRESENTATIVES, ACTION STANDS RESTRICTED TO THE ME MBERS WHO ARE REGISTERED WITH THE MCI. IN OTHER WORDS THE CENSURE/ACTION AS HAD BEEN SUGGESTE D ON THE VIOLATION OF THE CODE OF CONDUCT IS ONLY FOR THE MEDICAL PRACTITIONERS AND NOT FOR THE PHARMACEUTICAL COMPANIES OR ALLIED HEALTH SECTOR INDUSTRIES. WE ARE THUS OF THE CONSIDERED VI EW THAT THE REGULATIONS ISSUED BY MCI ARE QUA THE DOCTORS/MEDICAL PRACTITIONERS REGISTERED WITH M CI, AND THE SAME SHALL IN NO WAY IMPINGE UPON THE CONDUCT OF THE PHARMACEUTICAL COMPANIES. A S A LOGICAL COROLLARY TO IT, IF THERE IS ANY VIOLATION OR PROHIBITION AS PER MCI REGULATION IN T ERMS OF EXPLANATION TO SEC. 37(1), THEN THE SAME WOULD DEBAR THE DOCTORS OR THE REGISTERED MEDI CAL PRACTITIONERS AND NOT THE PHARMACEUTICAL COMPANIES AND THE ALLIED HEALTHCARE SECTOR FOR CLAI MING THE SAME AS AN EXPENDITURE. 23. WE FIND THAT THE CBDT AS PER ITS CIRCULAR NO. 5 /2012, DATED 01.08.2012 HAD ENLARGED THE SCOPE AND APPLICABILITY OF INDIAN MEDICAL COUNCIL R EGULATION, 2002, BY MAKING THE SAME APPLICABLE EVEN TO THE PHARMACEUTICAL COMPANIES OR ALLIED HEALTHCARE SECTOR INDUSTRIES. WE ARE OF THE CONSIDERED VIEW THAT SUCH AN ENLARGEMENT OF THE SCOPE OF MCI REGULATION TO THE PHARMACEUTICAL COMPANIES BY THE CBDT IS WITHOUT ANY ENABLING PROVISION EITHER UNDER THE INCOME TAX ACT OR UNDER THE INDIAN MEDICAL COUNCIL REGULATIONS. WE ARE OF A STRONG CONVICTION THAT THE CBDT CANNOT PROVIDE CASUS OMISS US TO A STATUTE OR NOTIFICATION OR ANY REGULATION WHICH HAS NOT BEEN EXPRESSLY PROVIDED TH EREIN. STILL FURTHER, THOUGH THE CBDT CAN TONE DOWN THE RIGOURS OF LAW IN ORDER TO ENSURE A F AIR ENFORCEMENT OF THE PROVISIONS BY ISSUING CIRCULARS FOR CLARIFYING THE STATUTORY PROVISIONS, HOWEVER, IT IS DIVESTED OF ITS POWER TO CREATE A NEW IMPAIRMENT ADVERSE TO AN ASSESSEE OR TO A CLASS OF ASSESSEE WITHOUT ANY SANCTION OR AUTHORITY OF LAW. WE ARE OF THE CONSIDERED VIEW THA T THE CIRCULARS WHICH ARE ISSUED BY THE CBDT MUST CONFIRM TO THE TAX LAWS AND THOUGH ARE ME ANT FOR THE PURPOSE OF GIVING ADMINISTRATIVE RELIEF OR FOR CLARIFYING THE PROVISI ONS OF LAW, BUT THE SAME CANNOT IMPOSE A BURDEN ON THE ASSESSEE, LEAVE ALONE CREATING A NEW BURDEN BY ENLARGING THE SCOPE OF A REGULATION ISSUED UNDER A DIFFERENT ACT SO AS TO IM POSE ANY KIND OF HARDSHIP OR LIABILITY ON THE ASSESSEE. WE THUS, ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE RIGOURS CONTEMPLATED IN THE CBDT CIRCULAR NO. 5/2012, DATED 01.08.2012, WHI CH WE WOULD NOT HESITATE TO OBSERVE, DESPITE ABSENCE OF ANYTHING PROVIDED BY THE MCI IN ITS REGULATIONS ISSUED UNDER THE MEDICAL COUNCIL ACT, 1956, CONTEMPLATING THAT THE REGULATIO N OF CODE OF CONDUCT WOULD ALSO COVER THE PHARMACEUTICAL COMPANIES AND HEALTHCARE SECTOR, HOW EVER PROVIDES THAT IN CASE A PHARMACEUTICAL OR ALLIED HEALTH SECTOR INDUSTRY INC URS ANY EXPENDITURE IN PROVIDING ANY GIFT, TRAVEL FACILITY, CASH, MONETARY GRANT OR SIMILAR FR EEBIES TO MEDICAL PRACTITIONERS OR THEIR PROFESSIONAL ASSOCIATIONS IN VIOLATION OF THE INDIA N MEDICAL COUNCIL (PROFESSIONAL CONDUCT, ETIQUETTE AND ETHICS) REGULATIONS, 2002, THE EXPEND ITURE INCURRED ON THE SAME SHALL BE DISALLOWED IN THE HANDS OF SUCH PHARMACEUTICAL OR A LLIED HEALTH SECTOR INDUSTRY. WE ARE OF THE CONSIDERED VIEW THAT THE BURDEN IMPOSED BY THE CBDT VIDE ITS AFORESAID CIRCULAR NO. 5/2012, DATED 01.08.2012 ON THE PHARMACEUTICAL OR ALLIED HE ALTH SECTOR INDUSTRIES, DESPITE ABSENCE OF ANY ENABLING PROVISION UNDER THE INCOME TAX LAW OR UNDER THE INDIAN MEDICAL COUNCIL REGULATIONS, CLEARLY IMPINGES ON THE CONDUCT OF THE PHARMACEUTICAL AND ALLIED HEALTH SECTOR INDUSTRIES IN CARRYING OUT ITS BUSINESS. WE THUS, I N THE ABSENCE OF ANY SANCTION OR AUTHORITY OF M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 11 LAW ON THE BASIS OF WHICH IT COULD SAFELY BE CONCLU DED THAT THE EXPENDITURE INCURRED BY THE ASSESSEE-COMPANY ON SALES PROMOTION EXPENSES BY WAY OF DISTRIBUTION OF ARTICLES TO THE STOCKISTS, DISTRIBUTORS, DEALERS, CUSTOMERS AND DOC TORS, IS IN THE NATURE OF AN EXPENDITURE WHICH HAD BEEN INCURRED FOR ANY PURPOSE WHICH IS EITHER A N OFFENCE OR PROHIBITED BY LAW, THUS CONCLUDE THAT THE SAME WOULD NOT BE HIT BY THE EXPL ANATION TO SEC. 37(1) OF THE ACT. 24. ALTERNATIVELY, WE ARE OF THE CONSIDERED VIEW TH AT IT IS A TRITE LAW THAT A CBDT CIRCULAR WHICH CREATES A BURDEN OR LIABILITY OR IMPOSES A NE W KIND OF IMPARITY, CANNOT BE RECKONED RETROSPECTIVELY. WE ARE OF THE CONSIDERED VIEW THAT THOUGH A BENEVOLENT CIRCULAR MAY APPLY RETROSPECTIVELY, BUT A CIRCULAR IMPOSING A BURDEN H AS TO BE APPLY PROSPECTIVELY ONLY. OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF DIRECTOR OF INCOME-TAX V. S.R.M.B DAIRY FARMING (P.) LTD . (2018) 400 ITR 9 (SC) . THE HON'BLE APEX COURT IN ITS AFORESAID JUDGMENT HAS HE LD THAT BENEFICIAL CIRCULARS HAD TO BE APPLIED RETROSPECTIVELY, WHILE OPPRESSIVE CIRCULARS HAD TO BE APPLIED PROSPECTIVELY, OBSERVING AS UNDER: '25. IT IS IN THIS CONTEXT, THE QUESTION ARISES, WH EN THE INSTRUCTION EXPRESSLY STATES THAT THE BENEFIT OF THE SAID POLICY IS PROSPECTIVE, STILL CA N THE COURTS PLACE A CONSTRUCTION ON SUCH INSTRUCTION SO AS TO MAKE IT RETROSPECTIVE. IN THIS CONTEXT, THE APEX COURT IN THE CASE OF CCE V. MYSORE ELECTRICALS INDUSTRIES LTD. REPORTED IN [200 6] 204 ELT 517 (SC) : [2007] 8 RC 1, DEALING WITH THE QUESTION HOW A BENEFICIAL CIRCULAR IS TO BE CONSTRUED, HAS APPROACHED THIS QUESTION IN THE FOLLOWING MANNER. AT PARAGRAPH 13 O F THE JUDGMENT, IT IS STATED THAT THE LEARNED COUNSEL FURTHER SUBMITTED THAT THE CIRCULAR BEING O PPRESSIVE AND AGAINST THE RESPONDENT, HAS TO APPLY ONLY PROSPECTIVELY AND CANNOT BE APPLIED RETR OSPECTIVELY. IN OTHER WORDS, A BENEFICIAL CIRCULAR HAS TO BE APPLIED PROSPECTIVELY. THUS, WHE N THE CIRCULAR IS AGAINST THE ASSESSEE THEY HAVE A RIGHT TO CLAIM THE ENFORCEMENT OF THE SAME P ROSPECTIVELY. IT IS FURTHER SUBMITTED THAT FOR THE PERIOD IN QUESTION, TRADE NOTICES HAD BEEN ISSU ED CLASSIFYING THE CIRCUIT BREAKERS UNDER HEADING NO. 85.35 OR 85.36. WHEN THE APPROVED CLASS IFICATION WAS PROPOSED TO BE REVISED TO RECLASSIFY THE SINGLE PANEL CIRCUIT BREAKERS UNDER HEADING NO.85.37 OF THE TARIFF, SUCH RE- CLASSIFICATION CAN TAKE EFFECT ONLY PROSPECTIVELY F ROM THE DATE OF COMMUNICATION OF THE SHOW- CAUSE NOTICE PROPOSING RECLASSIFICATION.' WE FIND THAT THE AFORESAID CBDT CIRCULAR NO. 5/2012 , DATED 01.08.2012 HAD CAME UP FOR CONSIDERATION BEFORE A COORDINATE BENCH OF THE TRIB UNAL IN THE CASE OF DCIT V. PHL PHARMA (P) LTD. [2017] 49 CCH 124 (MUM), WHEREIN THE TRIBUNAL AFTE R DELIBERATING AT LENGTH ON TWO ASPECTS VIZ. ( I ) VALIDITY OF THE CIRCULAR IN THE BACKDROP OF ENLAR GEMENT OF SCOPE OF MCI REGULATION TO THE PHARMACEUTICAL COMPANIES BY THE C BDT, WITHOUT ANY ENABLING PROVISIONS EITHER UNDER THE INCOME TAX LAW OR UNDER THE INDIAN MEDICAL COUNCIL REGULATIONS; AND ( II ). THE PROSPECTIVE APPLICABILITY OF THE CIRCULAR, HAD OBSE RVED AS UNDER: '5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS MADE B Y LD. CIT DR AS WELL AS LD. SR. COUNSEL, MR J.D. MISTRY, PERUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDERS AND MATERIAL REFERRED TO BEFORE US. THE ENTIRE CONTROVERSY REVOLVES AROUND, WHETHER THE EXPENDITURES IN QUESTION INCURRED BY THE ASSESSEE (A PHARMACEUTICAL COMPANY) IS HIT BY EXPLANATION 1 BELOW SECTION 37(1) IN VIEW OF CBDT CIRCULAR DATED 01.08.2012, IN TERPRETING THE AMENDMENT DATED 10.12.2009 BROUGHT IN INDIAN MEDICAL COUNCIL REGULA TION 2002 OR NOT. THE BREAK-UP OF SALES PROMOTION EXPENSES, WHICH HAS BEEN DISALLOWED BY TH E AO, ARE AS UNDER: SR.NO. PARTICULARS OF EXPENSES AMOUNT (IN RS.) 1 CUSTOMER RELATIONSHIP MANAGEMENT EXPENSES (CRM) 7,61,96,260 M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 12 2 KEY ACCOUNT MANAGEMENT EXPENSES (KAM) 2,56,68,509 3 GIFT ARTICLES 9,20,22,518 4 COST OF SAMPLES 3,60,85,320 TOTAL 22,99,72,607 THE NATURE OF AFORESAID EXPENSES HAS ALREADY BEEN E XPLAINED ABOVE. NOW WHETHER THE NATURE OF SUCH EXPENDITURE INCURRED BY THE ASSESSEE IS TO BE DISALLOWED IN VIEW OF THE CBDT CIRCULAR DATED 01.08.2012. FOR THE SAKE OF READY REFERENCE, THE SAID CBDT CIRCULAR NO.5/2012 IS REPRODUCED HEREUNDER: 'INADMISSIBILITY OF EXPENSES INCURRED IN PROVIDING FREEBEES TO MEDICAL PRACTITIONER BY PHARMACEUTICAL AND ALLIED HEALTH SE CTOR INDUSTRY CIRCULAR NO. 5/2012 [F. NO. 225/142/2012-ITA.II], D ATED 1-8-2012 IT HAS BEEN BROUGHT TO THE NOTICE OF THE BOARD THAT SOME PHARMACEUTICAL AND ALLIED HEALTH SECTOR INDUSTRIES ARE PROVIDING FREEBEES (FREEBIES) TO MEDICAL PRACTITIONERS AND THEIR PROFESSIONAL ASSOCIATIONS IN VIOLATION OF THE REGUL ATIONS ISSUED BY MEDICAL COUNCIL OF INDIA (THE 'COUNCIL') WHICH IS A REGULATORY BODY CONSTITUTED U NDER THE MEDICAL COUNCIL ACT, 1956. 2. THE COUNCIL IN EXERCISE OF ITS STATUTORY POWERS AMENDED THE INDIAN MEDICAL COUNCIL (PROFESSIONAL CONDUCT, ETIQUETTE AND ETHICS) REGULA TIONS, 2002 (THE REGULATIONS) ON 10-12- 2009 IMPOSING A PROHIBITION ON THE MEDICAL PRACTITI ONER AND THEIR PROFESSIONAL ASSOCIATIONS FROM TAKING ANY GIFT, TRAVEL FACILITY, HOSPITALITY, CASH OR MONETARY GRANT FROM THE PHARMACEUTICAL AND ALLIED HEALTH SECTOR INDUSTRIES. 3. SECTION 37(1) OF INCOME TAX ACT PROVIDES FOR DED UCTION OF ANY REVENUE EXPENDITURE (OTHER THAN THOSE FAILING UNDER SECTIONS 30 TO 36) FROM TH E BUSINESS INCOME IF SUCH EXPENSE IS LAID OUT/EXPENDED WHOLLY OR EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSION. HOWEVER, THE EXPLANATION APPENDED TO THIS SUB-SECTION DENIES CLA IM OF ANY SUCH EXPENSE, IF THE SAME HAS BEEN INCURRED FOR A PURPOSE WHICH IS EITHER AN OFFENCE O R PROHIBITED BY LAW. THUS, THE CLAIM OF ANY EXPENSE INCURRED IN PROVIDIN G ABOVE MENTIONED OR SIMILAR FREEBEES IN VIOLATION OF THE PROVISIONS OF INDIAN MEDICAL COUNC IL (PROFESSIONAL CONDUCT, ETIQUETTE AND ETHICS) REGULATIONS, 2002 SHALL BE INADMISSIBLE UND ER SECTION 37(1) OF THE INCOME TAX ACT BEING AN EXPENSE PROHIBITED BY THE LAW. THIS DISALL OWANCE SHALL BE MADE IN THE HANDS OF SUCH PHARMACEUTICAL OR ALLIED HEALTH SECTOR INDUSTRIES O R OTHER ASSESSEE WHICH HAS PROVIDED AFORESAID FREEBEES AND CLAIMED IT AS A DEDUCTIBLE E XPENSE IN ITS ACCOUNTS AGAINST INCOME. 4. IT IS ALSO CLARIFIED THAT THE SUM EQUIVALENT TO VALUE OF FREEBEES ENJOYED BY THE AFORESAID MEDICAL PRACTITIONER OR PROFESSIONAL ASSOCIATIONS I S ALSO TAXABLE AS BUSINESS INCOME OR INCOME FROM OTHER SOURCES AS THE CASE MAY BE DEPENDING ON THE FACTS OF EACH CASE. THE ASSESSING OFFICERS OF SUCH MEDICAL PRACTITIONER OR PROFESSION AL ASSOCIATIONS SHOULD EXAMINE THE SAME AND TAKE AN APPROPRIATE ACTION. THIS MAY BE BROUGHT TO THE NOTICE OF ALL THE OFFICE RS OF THE CHARGE FOR NECESSARY ACTION.' FROM THE PERUSAL OF THE AFORESAID BOARD CIRCULAR, I T CAN BE SEEN THAT HEAVY RELIANCE HAS BEEN PLACED BY THE CBDT ON THE CIRCULARS ISSUED BY THE M EDICAL COUNCIL OF INDIA, WHICH IS THE REGULATORY BODY CONSTITUTED UNDER THE 'MEDICAL COUN CIL ACT, 1956'. ONE SUCH REGULATION HAS BEEN ISSUED IS 'INDIAN MEDICAL COUNCIL PROFESSIONAL CONDUCT, ETIQUETTE AND ETHICS) REGULATIONS, 2002'. THE SAID REGULATION DEALS WITH THE PROFESSIONAL CONDUCT, ETIQUETTE AND M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 13 ETHICS FOR REGISTERED MEDICAL PRACTITIONERS ONLY. C HAPTER 6 OF THE SAID REGULATION/NOTIFICATION DEALS WITH UNETHICAL ACTS, WHEREBY A PHYSICIAN OR M EDICAL PRACTITIONERS SHALL NOT AID OR ABET OR COMMIT ANY OF THE ACTS ILLUSTRATED IN CLAUSE 6.1 TO 6.7 OF THE SAID REGULATION WHICH SHALL BE CONSTRUED AS UNETHICAL. CLAUSE 6.8 HAS BEEN ADDED ( BY WAY OF AMENDMENT DATED 10.12.2009) IN TERMS OF NOTIFICATION PUBLISHED ON 14.12.2009 IN GA ZETTE OF INDIA. THE SAID CLAUSE READS AS UNDER:- '6.8 CODE OF CONDUCT FOR DOCTORS AND PROFESSIONAL A SSOCIATION OF DOCTORS IN THEIR RELATIONSHIP WITH PHARMACEUTICAL AND ALLIED HEALTH SECTOR INDUST RY. 6.8.1 IN DEALING WITH PHARMACEUTICAL AND ALLIED HEA LTH SECTOR INDUSTRY, A MEDICAL PRACTITIONER SHALL FOLLOW AND ADHERE TO THE STIPULATIONS GIVEN B ELOW: ( A ) GIFTS: A MEDICAL PRACTITIONER SHALL NOT RECEIVE ANY GIFT FROM ANY P HARMACEUTICAL OR ALLIED HEALTH CARE INDUSTRY AND TH EIR SALES PEOPLE OR REPRESENTATIVES. ( B ) TRAVEL FACILITIES: A MEDICAL PRACTITIONER SHALL NOT ACCEPT A ANY TRAVEL FACILITY INSIDE THE COUNTRY OR OUTSIDE, INCLUDING RAIL, AIR, SHIP, CRUISE TICKETS, PAID VACATIONS ETC. FROM ANY PHARMACEUTICAL OR ALLIED HE ALTHCARE INDUSTRY OR THEIR REPRESENTATIVES FOR SELF AND FAMILY MEMBERS FOR VAC ATION OR FOR ATTENDING CONFERENCES, SEMINARS, WORKSHOPS, CME PROGRAMME ETC . AS A DELEGATE. ( C ) HOSPITALITY: A MEDICAL PRACT ITIONER SHALL NOT ACCEPT INDIVIDUALLY ANY HOSPITALI TY LIKE HOTEL ACCOMMODATION FOR SELF AND FAMILY MEMBER S UNDER ANY PRETEXT. ( D ) CASH OR MONETARY GRANTS: A MEDICAL PRACTITIONER SHA LL NOT RECEIVE ANY CASH OR MONETARY GRANTS FROM ANY PHARMACEUTICAL AND ALLIED HEALTHCARE INDUSTRY FOR INDIVIDUAL PURPOSE IN INDIVIDUAL CAPACITY UNDER ANY PRETEXT. FUNDING FOR MEDICAL RESEARCH, STUDY ETC. CAN ONLY BE RECEIVED T HROUGH APPROVED INSTITUTIONS BY MODALITIES LAID DOWN BY LAW/RULES/G UIDELINES ADOPTED BY SUCH APPROVED INSTITUTIONS, IN A TRANSPARENT MANNER. IT SHALL ALW AYS BE FULLY DISCLOSED. ( E ) MEDICAL RESEARCH: A MEDICAL PRACTITIONER MAY CARRY OUT, PARTICIPATE IN WORK, IN RESEARCH PROJECTS FUNDED BY PHARMACEUTICAL AND A LLIED HEALTHCARE INDUSTRIES. A MEDICAL PRACT ITIONER IS OBLIGED TO KNOW THAT THE FULFILMENT OF T HE FOLLOWING ITEMS: ( I ) TO (VII) WILL BE AN IMPERATIVE FOR UNDERTAKING AN Y RESEARCH ASSIGNMENT/PROJECT FUNDED BY INDUSTRY FOR BEING PRO PER AND ETHICAL. THUS, IN ACCEPTING SUCH A POSITION A MEDICAL PRACTITIONER SH ALL:- ( I ) ENSURE THAT THE PARTICULAR RESEARCH PROPOSAL(S) HAS THE DUE PERMISSION FROM THE COMPETENT CONCERNED AUTHORITIES. ( II ) ENSURE THAT SUCH A RESEARCH PROJECT(S) HAS THE CLEA RANCE OF NATIONAL/ STATE/INSTITUTIONAL ETHICS COMMITTEES/BODIES. ( III ) ENSURE THAT IT FULFILS ALL THE LEGAL REQUIREMENTS P RESCRIBED FOR MEDICAL RESEARCH. ( IV ) ENSURE THAT THE SOURCE AND AMOUNT OF FUNDING IS PUB LICLY DISCLOSED AT THE BEGINNING ITSELF. ( V ) ENSURE THAT PROPER CARE AND FACILITIES ARE PROVIDED TO HUMAN VOLUNTEERS, IF THEY ARE NECESSARY FOR THE RESEARCH PROJECT(S). ( VI ) ENSURE THAT UNDUE ANIMAL EXPERIMENTATIONS ARE NOT D ONE AND WHEN THESE ARE M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 14 NECESSARY THEY ARE DONE IN A SCIENTIFIC AND A HUMAN E WAY. ( VII ) ENSURE THAT WHILE ACCEPTING SUCH AN ASSIGNMENT A ME DICAL PRACTITIONER SHALL HAVE THE FREEDOM TO PUBLISH THE RESULTS OF THE RESEARCH IN T HE GREATER INTEREST OF THE SOCIETY BY INSERTING SUCH A CLAUSE IN THE MOU OR ANY OTHER DOC UMENT/AGREEMENT FOR ANY SUCH ASSIGNMENT. ( F ) MAINTAININ G PROFESSIONAL AUTONOMY: IN DEALING WITH PHARMACEUT ICAL AND ALLIED HEALTHCARE INDUSTRY A MEDICAL PRACTITIONER SHALL AL WAYS ENSURE THAT THERE SHALL NEVER BE ANY COMPROMISE EITHER WITH HIS/HER OWN PRO FESSIONAL AUTONOMY AND/OR WITH THE AUTONOMY AND FREEDOM OF THE MEDICAL INSTITUTION. ( G ) AFFILIATION: A MEDICAL PRACTITIONER MAY WORK FOR PH ARMACEUTICAL AND ALLIED HEALTHCARE INDUSTRIES IN ADVISORY CAPACITIES, AS CO NSULTANTS, AS RESEARCHERS, AS TREATING DOCTORS OR IN ANY OTHER PROFESSIONAL CA PACITY. IN DOING S O, A MEDICAL PRACTITIONER SHALL ALWAYS: ( I ) ENSURE THAT HIS PROFESSIONAL INTEGRITY AND FREEDOM ARE MAINTAINED. ( II ) ENSURE THAT PATIENTS' INTERESTS ARE NOT COMPROMISED IN ANY WAY. ( III ) ENSURE THAT SUCH AFFILIATIONS ARE WITHIN THE LAW. ( IV ) ENSURE THAT SUCH AFFILIATIONS/EMPLOYMENTS ARE FULLY TRANSPARENT AND DISCLOSED. ( H ) ENDORSEMENT: A MEDICAL PRACTITIONER SHALL NOT ENDOR SE ANY DRUG OR PRODUCT OF THE INDUSTRY PUBLICALLY. ANY STUDY CONDUCTED ON THE EFFICACY OR OTHERWISE OF SUCH PRODUCTS SHALL BE PRESENTED TO AND/OR THROUGH APPROPRIATE SC IENTIFIC BODIES OR PUBLISHED IN APPROPRIATE SCIENTIFIC JOURN ALS IN A PROPER WAY'. 6. ON A PLAIN READING OF THE AFORESAID NOTIFICATION , WHICH HAS BEEN HEAVILY RELIED UPON BY THE DEPARTMENT, IT IS QUITE APPARENT THAT THE CODE OF C ONDUCT ENSHRINED THEREIN IS MEANT TO BE FOLLOWED AND ADHERED BY MEDICAL PRACTITIONERS/DOCTO RS ALONE. IT ILLUSTRATES THE VARIOUS KINDS OF CONDUCT OR ACTIVITIES WHICH A MEDICAL PRACTITIONER SHOULD AVOID WHILE DEALING WITH PHARMACEUTICAL COMPANIES AND ALLIED HEALTH SECTOR I NDUSTRY. IT PROVIDES GUIDELINES TO THE MEDICAL PRACTITIONERS OF THEIR ETHICAL CODES AND MO RAL CONDUCT. NOWHERE THE REGULATION OR THE NOTIFICATION MENTIONS THAT SUCH A REGULATION OR COD E OF CONDUCT WILL COVER PHARMACEUTICAL COMPANIES OR HEALTHCARE SECTOR IN ANY MANNER. THE D EPARTMENT HAS NOT BROUGHT ANYTHING ON RECORD TO SHOW THAT THE AFORESAID REGULATION ISSUED BY MEDICAL COUNCIL OF INDIA IS MEANT FOR PHARMACEUTICAL COMPANIES IN ANY MANNER. ON THE CONT RARY, BEFORE US THE LEARNED SENIOR COUNSEL, SHRI MISTRY BROUGHT TO OUR NOTICE THE JUDG MENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF MAX HOSPITAL V. MCI IN WPC 1334/2013 JUDGME NT DATED 10.01.2014, WHEREIN THE MEDICAL COUNCIL OF INDIA ADMITTED THAT THE INDIAN M EDICAL COUNCIL REGULATION OF 2002 HAS JURISDICTION TO TAKE ACTION ONLY AGAINST THE MEDICA L PRACTITIONERS AND NOT TO HEALTH SECTOR INDUSTRY. RELEVANT PORTION OF THE SAID JUDGMENT REA DS AS UNDER: '6. THE PETITIONER'S GRIEVANCE IS TWO FOLD. FIRSTLY , THAT SINCE THE MEDICAL COUNCIL OF INDIA (PROFESSIONAL CONDUCT, ETIQUETTE AND ETHICS) REGULA TIONS, 2002 (THE REGULATIONS) HAVE BEEN FRAMED IN EXERCISE OF THE POWER CONFERRED UNDER SEC TION 20A READ WITH SECTION 33(M) OF THE INDIAN MEDICAL COUNCIL ACT, 1956, THESE REGULATIONS DO NOT GOVERN OR HAVE ANY CONCERN WITH THE FACILITIES, INFRASTRUCTURE OR RUNNING OF THE HO SPITALS AND SECONDLY, THAT THE ETHICS COMMITTEE OF THE MCI ACTING UNDER THE REGULATIONS HAD NO JURI SDICTION TO PASS ANY DIRECTION OR JUDGMENT ON THE INFRASTRUCTURE OF ANY HOSPITAL WHICH POWER R ESTS SOLELY WITH THE CONCERNED STATE GOVT. THE CASE OF THE PETITIONER IS THAT THE PETITIONER H OSPITAL IS GOVERNED BY THE DELHI NURSING HOMES REGISTRATION ACT, 1953. IT IS URGED THAT IN F ACT, AN INSPECTION WAS ALSO CARRIED OUT ON M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 15 22.07.2011 BY DR. R.N. DASS, MEDICAL SUPERINTENDENT (NURSING HOME) UNDER THE DIRECTORATE OF HEALTH SERVICES, GOVT. OF NCT OF DELHI AND THE NECE SSARY EQUIPMENTS AND FACILITIES WERE FOUND TO BE IN ORDER WHICH NEGATES THE OBSERVATIONS DATED 27.10.2012 OF THE ETHICS COMMITTEE OF THE MCI. IT IS ALSO THE PLEA OF THE PETITIONER HOSPITAL THAT THE PETITIONER WAS NOT PROVIDED AN OPPORTUNITY OF BEING HEARD AND THUS THE PRINCIPLES OF NATURAL JUSTICE WERE VIOLATED. 7. IN THE COUNTER AFFIDAVIT FILED BY THE RESPONDENT S, IT IS NOT DISPUTED THAT THE MCI UNDER THE 2002 REGULATIONS HAS JURISDICTION LIMITED TO TAKING ACTION ONLY AGAINST THE REGISTERED MEDICAL PRACTITIONERS. ITS PLEA HOWEVER, IS THAT IT HAS NOT PASSED ANY ORDER AGAINST THE PETITIONER HOSPITAL THEREFORE; THE PETITIONER CANNOT HAVE ANY GRIEVANCE AGAINST THE IMPUGNED ORDER. . . . . . . . . . . . . . 8. IT IS CLEARLY ADMITTED BY THE RESPONDENT THAT IT HAS NO JURISDICTION TO PASS ANY ORDER AGAINST THE PETITIONER HOSPITAL UNDER THE 2002 REGULATIONS. IN FACT, IT IS STATED THAT IT HAS NOT PASSED ANY ORDER AGAINST THE PETITIONER HOSPITAL. THUS, I NEED NOT GO INTO THE QUESTION WHETHER THE A DEQUATE INFRASTRUCTURE FACILITIES FOR APPROPRIATE POST-OPERATIVE CARE WERE IN FACT IN EXI STENCE OR NOT IN THE PETITIONER HOSPITAL AND WHETHER THE PRINCIPLES OF NATURAL JUSTICE HAD BEEN FOLLOWED OR NOT WHILE PASSING THE IMPUGNED ORDER. SUFFICE IT TO SAY THAT THE OBSERVATIONS DATE D 27.10.2012 MADE BY THE ETHICS COMMITTEE DO REFLECT UPON THE INFRASTRUCTURE FACILITIES AVAILABL E IN THE PETITIONER HOSPITAL AND SINCE IT HAD NO JURISDICTION TO GO INTO THE SAME, THE OBSERVATIONS WERE UNCALLED FOR AND CANNOT BE SUSTAINED. ' [EMPHASIS ADDED IS OURS] FROM THE AFORESAID DECISION, IT IS OSTENSIBLY CLEAR THAT THE MEDICAL COUNCIL OF INDIA HAS NO JURISDICTION TO PASS ANY ORDER OR REGULATION AGAINS T ANY HOSPITAL OR ANY HEALTHCARE SECTOR UNDER ITS 2002 REGULATION. SO ONCE THE INDIAN MEDICAL COU NCIL REGULATION DOES NOT HAVE ANY JURISDICTION NOR HAS ANY AUTHORITY UNDER LAW UPON T HE PHARMACEUTICAL COMPANY OR ANY ALLIED HEALTH SECTOR INDUSTRY, THEN SUCH A REGULATION CANN OT HAVE ANY PROHIBITORY EFFECT ON THE PHARMACEUTICAL COMPANY LIKE THE ASSESSEE. IF MEDICA L COUNCIL REGULATION DOES NOT HAVE ANY JURISDICTION UPON PHARMACEUTICAL COMPANIES AND IT I S INAPPLICABLE UPON PHARMA COMPANIES LIKE ASSESSEE THEN, WHERE IS THE VIOLATION OF ANY O F LAW/REGULATION? UNDER WHICH PROVISION THERE IS ANY OFFENCE OR VIOLATION IN INCURRING OF SUCH KI ND OF EXPENDITURE. THE RELEVANT PROVISION OF SECTION 37(1) READS AS UNDER: '(1) ANY EXPENDITURE (NOT BEING EXPENDITURE OF THE NATURE DESCRIBED IN SECTIONS 30 TO 36 AND NOT BEING IN THE NATURE OF CAPITAL EXPENDITURE OR PERSO NAL EXPENSES OF THE ASSESSEE), LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OR PROFESSION SHALL BE ALLOWED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEADS 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' EXPLANATION 1 FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLAR ED THAT ANY EXPENDITURE INCURRED BY AN ASSESSEE FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW SHALL NOT BE DEEMED TO HAVE BEEN INCURRED FOR THE PURPOSE OF BUS INESS OR PROFESSION AND NO DEDUCTION OR ALLOWANCE SHALL BE MADE IN RESPECT OF SUCH EXPENDIT URE.' THE AFORESAID PROVISION APPLIES TO AN ASSESSEE WHO IS CLAIMING DEDUCTION OF EXPENDITURE WHILE COMPUTING HIS BUSINESS INCOME. THE EXPLANATION PROV IDES AN EMBARGO UPON ALLOWING ANY EXPENDITURE INCURRED BY THE ASSESSEE FOR ANY PURPOS E WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW. THIS MEANS THAT THERE SHOULD BE AN OFFENCE BY AN ASSESSEE WHO IS CLAIMING THE EXPENDITURE OR THERE IS ANY KIND OF PROHIBITION BY LAW WHICH IS APPLICABLE TO THE ASSESSEE. HERE IN THIS CASE, NO SUCH OFFENCE OF LAW HAS BEEN BROUG HT ON RECORD, WHICH PROHIBITS THE M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 16 PHARMACEUTICAL COMPANY NOT TO INCUR ANY DEVELOPMENT OR SALES PROMOTION EXPENSES. A LAW WHICH IS APPLICABLE TO DIFFERENT CLASS OF PERSONS O R PARTICULAR CATEGORY OF ASSESSEE, SAME CANNOT BE MADE APPLICABLE TO ALL. THE REGULATION OF 2002 I SSUED BY THE MEDICAL COUNCIL OF INDIA (SUPRA), PROVIDES LIMITATION/CURB/PROHIBITION FOR M EDICAL PRACTITIONERS ONLY AND NOT FOR PHARMACEUTICAL COMPANIES. HERE THE MAXIM OF 'EXPRES SIO UNIUS EST EXCLUSIO ALTERIUS' IS CLEARLY APPLICABLE, THAT IS, IF A PARTICULAR EXPRES SION IN THE STATUTE IS EXPRESSLY STATED FOR PARTICULAR CLASS OF ASSESSEE THEN BY IMPLICATION WH AT HAS NOT BEEN STATED OR EXPRESSED IN THE STATUTE HAS TO BE EXCLUDED FOR OTHER CLASS OF ASSES SEE. IF THE MEDICAL COUNCIL REGULATION IS APPLICABLE TO MEDICAL PRACTITIONERS THEN IT CANNOT BE MADE APPLICABLE TO PHARMA OR ALLIED HEALTH CARE COMPANIES. IF SECTION 37(1) IS APPLICAB LE TO AN ASSESSEE CLAIMING THE EXPENSE THEN BY IMPLICATION, ANY IMPAIRMENT CAUSED BY EXPLANATIO N 1 WILL APPLY TO THAT ASSESSEE ONLY. ANY IMPAIRMENT OR PROHIBITION BY ANY LAW/REGULATION ON A DIFFERENT CLASS OF PERSON/ASSESSEE WILL NOT IMPINGE UPON THE ASSESSEE CLAIMING THE EXPENDITURE UNDER THIS SECTION. 7. BEFORE US THE LEARNED CIT DR STRONGLY RELIED UPO N THE FACT THAT CBDT CIRCULAR, WHILE CLARIFYING THE APPLICABILITY OF EXPLANATION 1 TO SE CTION 37(1) ON MEDICAL PRACTITIONERS AND PHARMACEUTICAL COMPANIES HAVE INTERPRETED THAT INDI AN MEDICAL COUNCIL REGULATION IS APPLICABLE FOR PHARMACEUTICAL COMPANIES ALSO. HE AL SO BROUGHT TO OUR NOTICE THAT ANOTHER NOTIFICATION WAS ISSUED BY INDIAN MEDICAL COUNCIL W HICH WAS PUBLISHED ON 01.12.2016 WHICH FURTHER PROHIBITS SUCH KIND OF EMBARGO ON MEDICAL P RACTITIONERS AND HAVE ADDED PARA 6.8.1 AND ALSO GIVEN INSTANCES OF ACTION WHICH SHALL BE TAKEN UPON MEDICAL PRACTITIONERS. THE RELEVANT CLAUSE OF THE SAID NOTIFICATION AS RELIED UPON BY H IM IS REPRODUCED HEREUNDER: 6.8. CODE OF CONDUCT FOR DOCTORS IN THEIR RELATIONS HIP WITH PHARMACEUTICAL AND ALLIED HEALTH SECTOR INDUSTRY. THE SECTION 68.1(B) SHALL BE SUBSTITUTED IN TERMS O F NOTIFICATION PUBLISHED ON 01.02.2016 IN GAZETTE OF INDIA, AS UNDER: (B) TRAVEL FACILITIES: A MEDICAL PRACTITIONER SHALL NOT ACCEPT ANY TRAVEL FACILITY INSIDE THE COUNTRY OR OUTSIDE, INCLUDING RAIL, ROAD, AIR, SHIP , CRUISE TICKETS, PAID VACATION, ETC., FROM ANY PHARMACEUTICAL OR ALLIED HEALTHCARE INDUSTRY OR THE IR REPRESENTATIVES FOR SELF AND FAMILY MEMBERS FOR VACATION OR FOR ATTENDING CONFERENCES, SEMINARS, WORKSHOPS, CME PROGRAMME ETC. AS A DELEGATE (III) ACTION TO BE TAKEN BY THE COUNCIL FOR VIOLATI ON OF SECTION 6.8 AS AMENDED VIDE NOTIFICATION DATED 10/12/2009, SHALL BE PRESCRIBED BY FURTHER AM ENDING THE SECTION 6.8.1 AS UNDER:- SECTION ACTION 6.8.1 IN DEALING WITH PHARMACEUTICAL AND ALLIED HEALTH SECTOR INDUSTRY, A MEDICAL PRACTITIONER SHAL L FOLLOW AND ADHERE TO THE STIPULATIONS GIVEN BELOW: - (A) GIFTS: A MEDICAL PRACTITIONER SHALL NOT RECEIVE ANY GIFT FROM ANY PHARMACEUTICAL OR ALLIED HEALTH CARE INDUSTRY AND THEIR SALES PEOPLE OR REPRESENTATIVES; GIFTS MORE THAN RS. 1,000/ - UPTO RS. 5,000/- : CENSURE GIFTS MORE THAN RS. 5,000/- UPTO RS. 10,000/- : REMOVAL FROM INDIAN MEDICAL REGISTER OR STATE MEDICAL REGISTER FOR 3 (THREE) MONTHS. GIFTS MORE THAN RS. 10,000/ - TO RS. 50,000/- : REMOVAL FROM INDIAN M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 17 MEDICAL REGISTER OR STATE MEDICAL REGISTER FOR 6(SIX) MONTHS. GIFTS MORE THAN RS. 50,000/- TO RS. 1,00,000/ - : REMOVAL FROM INDIAN MEDICAL REGISTER OR STATE MEDICAL REGISTER FOR 1 (ONE) YEAR. GIFTS MORE THAN RS. 1,00,000/- : REMOVAL FOR A PERIOD OF MORE THAN 1 (ONE) YEAR FROM INDIAN MEDICAL REGISTER OR STATE MEDICAL REGISTER. (B) TRAVEL FACILITIES: A MEDICAL PRACTITIONER SHALL NOT ACCEPT ANY TRAVEL FACILITY INSIDE THE COUNTRY OR OUTSIDE, INCLUDING RAIL, ROAD, AIR, SHIP, CRUISE TI CKETS, PAID VACATIONS ETC. FROM ANY PHARMACEUTICAL OR ALLIED HEALTHCARE INDUSTRY OR THEIR REPRESENTATIVES FOR SELF AND FAMILY MEMBERS FOR VACATION OR FOR ATTENDING CONFERENCES, SEMINARS, WORKSHOPS, CME PROGRAMME ETC. AS A DELEGATE. EXPENSES FOR TRAVEL FACILITIES MORE THAN RS. 1,000/ - UPTO RS. 5,000/ -: CENSURE EXPENSES FOR TRAVEL FACILITIES MORE THAN RS. 5,000/- UPTO RS. 10,000/-: REMOVAL FROM INDIAN MEDICAL REGISTER OR STATE MEDICAL REGISTER FOR 3 (THREE) MONTHS. EXPENSES FOR TRAVEL FACILITIES MORE THAN RS.10,000/-TO RS. 50,000/-: REMOVAL FROM INDIAN MEDICAL REGISTER OR STATE MEDICAL REGISTER FOR 6 (SIX) MONTHS. EXPENSES FOR TRAVEL FACILITIES MORE THAN MORE THAN RS. 50,000/- TO RS. 1,00,000/-: REMOVAL FROM INDIAN MEDICAL REGISTER OR STATE MEDICAL REGISTER FOR 1 (ONE) YEAR. EXPENSES FOR TRAVEL FACILITIES MORE THAN RS. 1,00,000/-: REMOVAL FOR A PERIOD OF MORE THAN 1 (ONE) YEAR FROM INDIAN MEDICAL REGISTER OR STATE MEDICAL REGISTER. (C) HOSPITALITY: A MEDICAL PRACTITIONER SHALL NOT ACCEPT INDIVIDUALLY ANY HOSPITALITY LIKE HOTEL ACCOMMODATION FOR SELF AND FAMILY MEMBERS UNDER ANY PRETEXT. EXPENSES FOR HOSPITALITY MORE THAN RS. 1,000/-UPTO RS. 5,000/-: CENSURE EXPENSES FOR HOSPITALITY MORE THAN RS. 5,000/- UPTO RS. 10,000/-: REMOVAL FROM INDIAN MEDICAL REGISTER OR STATE MEDICAL REGISTER FOR 3 (THREE) MONTHS. EXPENSES FOR HOSPITALITY MORE THAN RS. 10,000/- TO RS. 50,000/-: REMOVAL FROM INDIAN MEDICAL REGISTER OR STATE MEDICAL REGISTER FOR 6 (SIX) MONTHS. EXPENSES FOR HOSPITALITY MORE THAN M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 18 MORE THAN RS. 50,000/- TO RS. 1,00,000/: REMOVAL FROM INDIAN MEDICAL REGISTER OR STATE MEDICAL REGISTER FOR 1 (ONE) YEAR. EXPENSES FOR HOSPITALITY MORE THAN RS. 1,00,000/-: REMOVAL FOR A PERIOD OF MORE THAN 1 (ONE) YEAR FROM INDIAN MEDICAL REGISTER OR STATE MEDICAL REGISTER. (D) CASH OR MONETARY GRANTS:- CASH OR MONETARY GRANTS MORE THAN RS. 1,000/- UPTO RS. 5,000/-: CENSURE. A MEDICAL PRACTITIONER SHALL NOT RECEIVE ANY CASH O R MONETARY GRANTS FROM ANY PHARMACEUTICAL AND ALLIED HEALTHCARE INDUSTRY FOR INDIVIDUAL PURPOSE I N INDIVIDUAL CAPACITY UNDER ANY PRETEXT. FUNDING FOR MEDICAL RESEARCH, STUDY ETC. CAN ONLY BE RECEIVED THROUGH APPROVED INSTITUTIONS BY MODALITIES LAID DOWN BY LAW/RULES/GUIDELINES ADOPTED BY SUCH APPROVED INSTITUTIONS, IN A TRANSPARENT MANNER. IT SHALL ALWAYS BE FULLY DISCLOSED. CASH OR MONETARY GRANTS MORE THAN RS. 5,000/-UPTO RS.10,000/-: REMOVAL FROM INDIAN MEDICAL REGISTER OR STATE MEDICAL REGISTER FOR MONTHS. CASH OR MONETARY GRANTS MORE THAN RS.10,000/- TO RS. 50,000/-: REMOVAL FROM INDIAN MEDICAL REGISTER OR STATE MEDICAL REGISTER FOR 6 (SIX) MONTHS. CASH OR MONETARY GRANTS MORE THAN MORE THAN RS. 50,000/- TO RS. 1,00,000/-: REMOVAL FROM INDIAN MEDICAL REGISTER OR STATE MEDICAL REGISTER FOR 1 (ONE) YEAR. CASH OR MONETARY GRANTS MORE THAN RS. 1,00,000/-: REMOVAL FOR A PERIOD OF MORE THAN 1 (ONE) YEAR FROM INDIAN MEDICAL REGISTER OR STATE MEDICAL REGISTER. FROM THE AFORESAID NOTIFICATION, LD. CIT DR SUBMITT ED THAT SO MANY VIOLATIONS AND CENSURES HAVE BEEN PRESCRIBED FOR ANY EXPENDITURES/OR BENEFI T GIVEN TO DOCTORS, THUS, VIOLATION OF SUCH GUIDELINES FOR INCURRING SUCH KIND OF EXPENDITURES CANNOT BE HELD TO BE ALLOWABLE EXPENDITURE. CBDT IS WELL WITHIN ITS POWER TO CLARIFY AND INTERP RET THE LAW AND PROHIBIT ALLOWANCE OF ANY EXPENDITURE WHICH VIOLATES ANY STATUTE OR IS IN NAT URE OF OFFENCE. 8. FROM A PERUSAL OF ABOVE AMENDMENT/NOTIFICATION I N THE MCI REGULATION, IT IS QUITE CLEAR AGAIN THAT SAME IS APPLICABLE FOR MEDICAL PRACTITIO NERS ONLY AND THE CENSURE/ACTION WHICH HAS BEEN SUGGESTED BY IT IS ONLY ON MEDICAL PRACTITIONE RS AND NOT FOR PHARMACEUTICAL COMPANIES OR ALLIED HEALTH SECTOR INDUSTRIES. THE VIOLATION OF T HE AFORESAID REGULATION WOULD NOT ONLY ENSURE A REMOVAL OF A DOCTOR FROM THE INDIAN MEDICAL REGIS TER OR STATE MEDICAL REGISTER FOR A CERTAIN PERIOD OF TIME AND IT DOES NOT IMPINGE UPON THE CON DUCT OF PHARMACEUTICAL COMPANIES. THIS IMPORTANT DISTINCTION HAS TO BE KEPT IN MIND THAT R EGULATION ISSUED BY MEDICAL COUNCIL OF INDIA IS QUA THE DOCTORS/MEDICAL PRACTITIONERS AND NOT FO R THE PHARMACEUTICAL COMPANIES. AS A LOGICAL COROLLARY TO IT, IF THERE IS ANY VIOLATION OR PROHI BITION AS PER MCI REGULATION IN TERMS OF SECTION 37(1) R.W. EXPLANATION1, THEN IT IS ONLY MEANT FOR MEDICAL PRACTITIONERS AND NOT FOR PHARMACEUTICAL COMPANY (ASSESSEE COMPANY) FOR CLAIM ING THE EXPENDITURE. M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 19 9. ADVERTING TO THE CONTENTION OF THE LD. CIT DR TH AT CBDT IS WELL EMPOWERED TO ISSUE SUCH CLARIFICATION, IT IS SEEN THAT THE CBDT CIRCULAR DA TED 01.08.2012 (SUPRA) IN ITS CLARIFICATION HAS ENLARGED THE SCOPE AND APPLICABILITY OF 'INDIAN MED ICAL COUNCIL REGULATION 2002' BY MAKING IT APPLICABLE TO THE PHARMACEUTICAL COMPANIES OR ALLIE D HEALTH CARE SECTOR INDUSTRIES. SUCH AN ENLARGEMENT OF SCOPE OF MCI REGULATION TO THE PHARM ACEUTICAL COMPANIES BY THE CBDT IS WITHOUT ANY ENABLING PROVISIONS EITHER UNDER THE PR OVISIONS OF INCOME TAX LAW OR BY ANY PROVISIONS UNDER THE INDIAN MEDICAL COUNCIL REGULAT IONS. THE CBDT CANNOT PROVIDE CASUS OMISSUS TO A STATUTE OR NOTIFICATION OR ANY REGULAT ION WHICH HAS NOT BEEN EXPRESSLY PROVIDED THEREIN. THE CBDT CAN TONE DOWN THE RIGOURS OF LAW AND ENSURE A FAIR ENFORCEMENT OF THE PROVISIONS BY ISSUING CIRCULARS AND BY CLARIFYING T HE STATUTORY PROVISIONS. CBDT CIRCULARS ACT LIKE 'CONTEMPORANEA EXPOSITIO' IN INTERPRETING THE STATUTORY PROVISIONS AND TO ASCERTAIN THE TRUE MEANING ENUNCIATED AT THE TIME WHEN STATUTE WAS ENA CTED. HOWEVER THE CBDT IN ITS POWER CANNOT CREATE A NEW IMPAIRMENT ADVERSE TO AN ASSESS EE OR TO A CLASS OF ASSESSEE WITHOUT ANY SANCTION OF LAW. THE CIRCULAR ISSUED BY THE CBDT MU ST CONFIRM TO TAX LAWS AND FOR PURPOSE OF GIVING ADMINISTRATIVE RELIEF OR FOR CLARIFYING THE PROVISIONS OF LAW AND CANNOT IMPOSE A BURDEN ON THE ASSESSEE, LEAVE ALONE CREATING A NEW BURDEN BY ENLARGING THE SCOPE OF A DIFFERENT REGULATION ISSUED UNDER A DIFFERENT ACT SO AS TO IM POSE ANY KIND OF HARDSHIP OR LIABILITY TO THE ASSESSEE. IN ANY CASE, IT IS TRITE LAW THAT THE CBD T CIRCULAR WHICH CREATES A BURDEN OR LIABILITY OR IMPOSES A NEW KIND OF IMPARITY, SAME CANNOT BE R ECKONED RETROSPECTIVELY. THE BENEFICIAL CIRCULAR MAY APPLY RETROSPECTIVELY BUT A CIRCULAR I MPOSING A BURDEN HAS TO BE APPLIED PROSPECTIVELY ONLY. HERE IN THIS CASE THE CBDT HAS ENLARGED THE SCOPE OF 'INDIAN MEDICAL COUNCIL REGULATION, 2002' AND MADE IT APPLICABLE FO R THE PHARMACEUTICAL COMPANIES. THEREFORE, SUCH A CBDT CIRCULAR CANNOT BE RECKONED TO HAVE RETROSPECTIVE EFFECT. THE SAME CBDT CIRCULAR HAD COME UP FOR CONSIDERATION BEFORE THE CO-ORDINATE BENCH OF THE ITAT, MUMBAI BENCH IN THE CASE OF SYNCOM FORMULATIONS (I) LTD. (IN ITA NOS. 6429 & 6428/MUM/2012 FOR A.YS. 2010-11 AND 2011-12, VIDE O RDER DATED 23.12.2015), WHEREIN TRIBUNAL HELD THAT CBDT CIRCULAR WOULD NOT BE NOT B E APPLICABLE IN THE A.YS. 2010-11 AND 2011-12 AS IT WAS INTRODUCED W.E.F. 1.8.2012. 10. FROM THE PERUSAL OF THE NATURE OF EXPENDITURE I NCURRED BY THE ASSESSEE, IT IS SEEN THAT UNDER THE HEAD 'CUSTOMER RELATIONSHIP MANAGEMENT', THE AS SESSEE ARRANGES NATIONAL LEVEL SEMINAR AND DISCUSSION PANELS OF EMINENT DOCTORS AND INVITI NG OF OTHER DOCTORS TO PARTICIPATE IN THE SEMINARS ON A TOPIC RELATED TO THERAPEUTIC AREA. IT ARRANGES LECTURES AND SPONSORS KNOWLEDGE UPGRADE COURSE WHICH HELPS PHARMACEUTICAL COMPANIES TO MAKE AWARE OF THE PRODUCTS AND MEDICINES MANUFACTURED AND LAUNCHED BY IT. UNDER KE Y ACCOUNT MANAGEMENT, THE ASSESSEE MAKES ENDEAVOUR TO CREATE AWARENESS AMONGST CERTAIN CLASS OF KEY DOCTORS ABOUT THE PRODUCTS OF THE ASSESSEE AND THE NEW DEVELOPMENTS TAKING PLA CE IN THE AREA OF MEDICINE AND PROVIDING CORRECT DIAGNOSIS AND TREATMENT OF THE PATIENTS. TH E SAID ACTIVITIES BY THE ASSESSEE ARE TO MAKE THE DOCTORS AWARE OF ITS PRODUCTS AND RESEARCH WORK CARRIED OUT BY IT FOR BRINGING THE MEDICINE IN THE MARKET AND ITS RESULTS ARE BASED ON SEVERAL LEVELS OF TESTS AND APPROVALS. UNLESS THE PHARMACEUTICAL COMPANIES MAKE AWARE OF SUCH KIND OF PRODUCTS TO KEY DOCTORS OR MEDICAL PRACTITIONERS, THEN ONLY IT CAN SUCCESSFULLY LAUNCH ITS PRODUCTS/MEDICINES. THIS KIND OF EXPENDITURE IS DEFINITELY IN THE NATURE OF SALES AN D BUSINESS PROMOTION, WHICH HAS TO BE ALLOWED. COMING TO THE GIFT ARTICLES AND FREE SAMPLES OF MED ICINES, IT IS SEEN THAT THE ASSESSEE GIVES VARIOUS KIND OF ARTICLES LIKE, DIARIES, PEN SETS, C ALENDARS, PAPER WEIGHTS, INJECTION BOXES ETC. EMBOSSED WITH BOLD LOGO OF ITS BRAND NAME AND THE P RODUCT NAME SO THAT THE DOCTORS REMEMBERS THE BRAND OF THE ASSESSEE AND ALSO THE NA ME OF THE MEDICINE. ALL THE GIFT ARTICLES, AS POINTED OUT BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW AND ALSO BEFORE US ARE VERY CHEAP AND M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 20 LOW CAST ARTICLES WHICH BEARS THE NAME OF ASSESSEE AND IT IS PURELY FOR THE PROMOTION OF ITS PRODUCT, BRAND REMINDER, ETC. THESE ARTICLES CANNOT BE RECKONED AS FREEBIES GIVEN TO THE DOCTORS. EVEN THE FREE SAMPLE OF MEDICINE IS ONLY T O PROVE THE EFFICACY AND TO ESTABLISH THE TRUST OF THE DOCTORS ON THE QUALITY OF THE DRUGS. THIS AG AIN CANNOT BE RECKONED AS FREEBIES GIVEN TO THE DOCTORS BUT FOR PROMOTION OF ITS PRODUCTS. THE PHARMACEUTICAL COMPANY, WHICH IS ENGAGED IN MANUFACTURING AND MARKETING OF PHARMACEUTICAL PR ODUCTS, CAN PROMOTE ITS SALE AND BRAND ONLY BY ARRANGING SEMINARS, CONFERENCES AND THEREBY CREATING AWARENESS AMONGST DOCTORS ABOUT THE NEW RESEARCH IN THE MEDICAL FIELD AND THE RAPEUTIC AREAS, ETC. EVERY DAY THERE ARE NEW DEVELOPMENTS TAKING PLACE AROUND THE WORLD IN THE A REA OF MEDICINE AND THERAPEUTIC, HENCE IN ORDER TO PROVIDE CORRECT DIAGNOSIS AND TREATMENT OF THE PATIENTS, IT IS IMPERATIVE THAT THE DOCTORS SHOULD KEEP THEMSELVES UPDATED WITH THE LAT EST DEVELOPMENTS IN THE MEDICINE AND THE MAIN OBJECT OF SUCH CONFERENCES AND SEMINARS IS TO UPDATE THE DOCTORS OF THE LATEST DEVELOPMENTS, WHICH IS BENEFICIAL TO THE DOCTORS IN TREATING THE PATIENTS AS WELL AS THE PHARMACEUTICAL COMPANIES. FURTHER AS POINTED OUT AN D CONCLUDED BY THE LEARNED CIT(A) THERE IS NO VIOLATION BY THE ASSESSEE IN SO FAR AS GIVING ANY KIND OF FREEBIES TO THE MEDICAL PRACTITIONERS. THUS, SUCH KIND OF EXPENDITURES BY A PHARMACEUTICAL COMPANIES ARE PURELY FOR BUSINESS PURPOSE WHICH HAS TO BE ALLOWED AS BUSINES S EXPENDITURE AND IS NOT IMPAIRED BY EXPLANATION 1 TO SECTION 37(1). 11. BEFORE US, THE LD. CIT DR HAS ALSO MUCH HARPED UPON THE DECISION OF THE HON'BLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF CONFEDERATION OF INDIAN PHARMACEUTICAL INDUSTRY (SS) V. CBDT (SUPRA), IN SUPPORT OF THE ARGUMENT THAT CBDT CIRCULAR HAS BEEN APPROVED AND CONFIRMED BY THE HIGH COURT AND THEREFORE, IT HAS A HUGE BINDING PRECEDENCE. FROM THE PERUSAL OF THE SAID JUDGMENT OF THE HON'BLE HIGH COURT, IT IS SEEN THAT IN THAT CASE THE VALIDITY OF CIRCULAR NO.5/12 DATED 1.8.2012 WAS CHALLENGED. THE HON'BLE HIGH COURT THOUGH UPHELD THE VALIDITY OF THE SAID CIRCULAR BUT WITH A RIDER THAT IF THE ASSESSEE SATISFIES THE ASSESSING AUTHORITY THAT THE EXPENDITURE IS NOT IN VIOLATION OF THE REG ULATION FRAMED BY THE MEDICAL COUNCIL, THEN IT MAY LEGITIMATELY CLAIM THE DEDUCTION. THE ASSESSEE HAS TO SATISFY THE AO THAT THE EXPENDITURE IS NOT IN VIOLATION OF THE MEDICAL COUNCIL REGULATION. THUS, IF THE ASSESSEE BRINGS OUT THAT THE MCI REGULATION IS NOT APPLICABLE TO THE ASSESSEE BEFORE THE AO, THE SAME CANNOT BE APPLIED BLINDLY. 12. AT THE TIME OF HEARING, OUR ATTENTION WAS ALSO DRAWN TO THE DECISION OF TRIBUNAL OF OUR CO- ORDINATE BENCH IN THE CASE OF 'LIVA HEALTHCARE LIMI TED ITA NOS. 904 & 945/MUM/2013', DECIDED VIDE ORDER DATED 12.09.2016. IN COUNTER, TO THIS DECISION THE LEARNED COUNSEL, SHRI JD MISTRY DISTINGUISHED THE SAID JUDGMENT AND SUBMITTE D THAT THE FACTS OF THE CASE IN THE LIVA HEALTHCARE (SUPRA) WERE SUBSTANTIALLY DIFFERENT FRO M THE FACTS OF THE PRESENT CASE. IN THE CASE OF LIVA HEALTHCARE, THE HON'BLE TRIBUNAL DISALLOWED SU CH EXPENSES U/S. 37(1) OF THE ACT ON THE GROUND THAT THEY WERE NOT INCURRED WHOLLY AND EXCLU SIVELY FOR THE PURPOSE OF BUSINESS AS THE SAME WERE INCURRED TO CREATE GOOD RELATIONS WITH TH E DOCTORS IN LIEU OF EXPECTED FAVOURS FROM DOCTORS FOR RECOMMENDING TO THE PATIENTS THE PHARMA CEUTICAL PRODUCTS DEALT WITH BY THE COMPANY TO GENERATE MORE AND MORE BUSINESS AND PROF ITS FOR THE ASSESSEE-COMPANY. THE TRIBUNAL ALSO RECORDED THE FACT THAT THE SPOUSE OF THE DOCTORS ALSO ACCOMPANIED THE DOCTORS FOR OVERSEAS TRIPS TO ISTANBUL AND EXPENSES WERE INCURR ED FOR CRUISE TRAVELS TO ISLAND, GALA DINNER, COCKTAILS, GALA ENTERTAINMENT ETC. OF SUCH DOCTORS. IN ASSESSEE'S CASE IT IS AN ADMITTED FACT THAT EXPENSES HAVE NOT BEEN INCURRED FOR THE PURPOSE PER SONAL BENEFIT/ENJOYMENT OF THE DOCTORS OR THEIR SPOUSES. IN THE CASE OF LIVA, THE QUESTION AS TO WHETHER SUCH IMC REGULATIONS CAN BE APPLICABLE TO PHARMA COMPANIES WAS NOT ARGUED BEFOR E THE HON'BLE BENCH. HE REITERATED THAT THE HON'BLE DELHI HIGH COURT IN THE CASE OF MAX HOS PITAL (SUPRA) AND THE JURISDICTIONAL TRIBUNAL IN THE CASE OF SYNCOM (SUPRA) HAVE HELD TH AT SUCH IMC REGULATIONS APPLY ONLY TO M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 21 MEDICAL PRACTITIONERS. HE FURTHER SUBMITTED THAT TH E TRIBUNAL IN THE CASE OF ACIT V. LIVA HEALTHCARE LTD. (ITA 847/MUM/2012) FOR A.Y. 2008-09 , HAS DECIDED SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE. HOWEVER, IN A.Y. 2009-10, HON'BLE TRI BUNAL WHILE NOTING THE FACT THAT CONSISTENCY HAS TO BE ADOPTED, DISTINGUISHED THE ORDER OF A.Y. 2008-09 AS UNDER: 'THE ASSESSEE HAS CONTENDED THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN ITA NO. 388/MUM/2012 FOR ASSESSMENT YEAR 2008-09. IN OUR CONSIDERED VIEW, PRINCIPLES OF RES JUDICATA IS NOT APPLICABLE TO INCOME TAX PROCEEDINGS ALTHOUGH WE ARE FULLY AGREEABLE THAT PR INCIPLES OF CONSISTENCY IS TO BE MAINTAINED (HON'BLE SUPREME COURT DECISION IN RADHA SOAMI SATS ANG V. CIT (1992) 193 ITR 321 (SC) BUT IN THE INSTANT ASSESSMENT YEAR, WE HAVE OBSERVED TH AT THESE OVERSEAS TRIPS FOR DOCTORS AND THEIR SPOUSES WERE ORGANIZED BY THE ASSESSEE WHEREBY NO D ETAILS OF THE CONTENTS OF SEMINAR, IF ANY CONDUCTED BY THE ASSESSEE OVERSEAS HAS BEEN BROUGHT ON RECORD AND ALSO EVEN THE SPOUSES ACCOMPANIED THE DOCTORS TO THE OVERSEAS TRIP WHICH INCLUDED CRUISE VISIT TO ISLAND, GALA DINNERS, COCKTAIL, GALA ENTERTAINMENT ETC. RATHER T HAN BEING DIRECTED TOWARDS SEMINAR FOR PRODUCT INFORMATION DISSEMINATION OR DIRECTED TOWAR DS KNOWLEDGE ENHANCEMENT OR KNOWLEDGE SHARING ORIENTED AS NO DETAILS OF SEMINAR AND ITS C OURSE CONTENT IS BROUGHT ON RECORD RATHER THE TRIP IS DIRECTED TOWARDS LEISURE AND ENTERTAINMENT OF DOCTORS AND THEIR SPOUSES WHICH IN OUR VIEW APPEARS TO BE CLEARLY A DISTINGUISHABLE FEATUR E IN THIS YEAR ENABLING US TO TAKE A DIVERGENT VIEW AND THE EXPENSES INCURRED BY THE ASSESSEE CANN OT BE ALLOWED AS BUSINESS EXPENDITURE U/S. 37 OF THE ACT AS IT IS CLEARLY HIT BY EXPLANATION T O SECTION 37 OF THE ACT BEING AGAINST PUBLIC POLICY AS UNETHICAL PROHIBITED BY LAW. IN VIEW OF THE ABOVE, HE POINTED OUT THAT IN THE AB OVE DECISION FOR A.Y. 2009-10 IN THE CASE OF LIVA HEALTHCARE, THERE WAS A SPECIFIC FINDING OF A FACT THAT NO DETAILS HAVE BEEN FILED WITH RESPECT TO ANY SEMINAR HAS BEEN CONDUCTED FOR DOCTO RS AND THAT THE TRIPS WERE DIRECTED TOWARDS LEISURE AND ENTERTAINMENT OF DOCTORS AND THEIR SPOU SES. THIS WAS A DISTINGUISHABLE FEATURE FOR THE HON'BLE TRIBUNAL TO TAKE A CONTRARY VIEW FROM A .Y. 2008-09. HE FURTHER SUBMITTED THAT THE HON'BLE TRIBUNAL IN THE CASE OF LIVA HEALTHCARE LTD . V. ACIT (ITA NO. 4791/MUM/2014) FOR A.Y. 2010-11 HAS FOLLOWED THE DECISION OF LIVA HEAL THCARE (SUPRA) FOR A.Y. 2008-09 AND HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. THIS, FURTHER BRINGS OUT THE FACT THAT THE HON'BLE TRIBUNAL DISALLOWED THE EXPENSES U/S. 37(1) OF THE ACT IN THE CASE OF LIVA HEALTHCARE FOR A.Y. 2009-10 ONLY ON THE GROUND THAT THE SAME WERE NOT I NCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. 13. APART FROM THE AFORESAID DISTINGUISHING FEATURE S AS HIGHLIGHTED BY THE LEARNED SENIOR COUNSEL, WE FIND THAT ON THE FACTS ITSELF IN THE CA SE OF LIVA HEALTHCARE (2009-2010) (SUPRA), THERE WAS A CLEAR CUT MATERIAL ON RECORD THAT THE D OCTORS ALONG WITH THEIR SPOUSES WERE TAKEN TO FOREIGN TOURS AND CRUISE TRAVEL ETC., IN LIEU OF EXPECTED FAVOURS FROM DOCTORS. IN THE LIGHT OF THESE FACTS AND MATERIAL THE TRIBUNAL HAS DECIDED T HE ISSUE AGAINST THE ASSESSEE BY NOT FOLLOWING THE EARLIER YEAR PRECEDENCE AND SUBSEQUEN T YEAR ORDERS OF THE SAME ASSESSEE. AS BROUGHT ON RECORD BEFORE US, WE FIND THAT SIMILAR I SSUE OF ALLOWANCE OF SUCH EXPENDITURE IN THE CASE OF PHARMACEUTICAL COMPANIES HAS BEEN DECIDED I N FAVOUR OF THE ASSESSEE, IN THE CASE OF UCB INDIA PVT. LTD. V. ITO (ITA NO. 6681/MUM/2013 O RDER DATED 13.05.2016, WHEREIN IT WAS HELD THAT CBDT CIRCULAR CANNOT HAVE A RETROSPECTIVE EFFECT. THIS JUDGMENT WAS LOST SIGHT OF BY THE BENCH. IN ANY CASE ON CAREFUL PERUSAL OF THE TR IBUNAL ORDER IN THE CASE OF LIVA HEALTHCARE (SUPRA) WE FIND THAT THE TRIBUNAL THOUGH HAS INCORP ORATED THE RELEVANT PROVISIONS AND CLAUSES OF THE 'INDIAN MEDICAL COUNCIL REGULATION 2002', HO WEVER, HAS NOT ELABORATED OR DWELL UPON AS TO HOW THIS MCI REGULATION WHICH IS STRICTLY MEANT FOR MEDICAL PRACTITIONERS AND DOCTORS CAN BE MADE APPLICABLE TO PHARMACEUTICAL COMPANIES. THERE HAS TO BE SOME ENABLING PROVISION OR M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 22 SPECIFIC CLAUSE IN THE SAID REGULATION WHEREBY THE PHARMACEUTICAL COMPANIES ARE BARRED FROM CONDUCTING SEMINARS OR CONFERENCES BY SPONSORING TH E DOCTORS. THE ENTIRE CONDUCT RELATES TO DOCTORS AND MEDICAL PRACTITIONERS AND LISTS OUT THE CENSURES AND FINES IMPOSED UPON THEM. WHAT HAS NOT BEEN PROVIDED IN THE MCI REGULATION CANNOT BE SUPPLIED EITHER BY THE COURT OR BY THE CBDT. THERE HAS TO BE EXPRESS PROVISION UNDER THE L AW WHEREBY PHARMACEUTICAL COMPANIES ARE PROHIBITED TO CONDUCT CONFERENCES OR SEMINAR OR GIVE FREE SAMPLES. IN THE TRIBUNAL DECISION OF LIVA HEALTHCARE, STRONG REFERENCE HAS BEEN MADE TO HON'BLE HIMACHAL PRADESH HIGH COURT (SUPRA), THAT THE SAID CBDT CIRCULAR HAS BEEN UPHEL D. ON THIS ASPECT WE HAVE ALREADY DISCUSSED IN DETAIL HEREIN ABOVE THAT, FIRSTLY, HIG H COURT ITSELF CARVES OUT A RIDER THAT ASSESSEE IS FREE TO DEMONSTRATE BEFORE THE AO THAT THIS CIRC ULAR IS NOT APPLICABLE ON FACTS OF THE CASE; AND SECONDLY, CBDT CIRCULAR WHICH CREATES NEW IMPAIRMEN T AND IMPOSES DISALLOWBILITY NOT ENVISAGED IN ANY OF THE ACT OR REGULATION CANNOT BE RECKONED TO BE RETROSPECTIVE. ANOTHER STRONG REFERENCE HAS BEEN MADE TO THE DECISION OF H ON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. KAP SCAN AND DIAGNOSTIC CENTRE ( P.) LTD. [2012] 25 TAXMANN.COM 92 , WHEREIN COMMISSION WAS PAID TO THE PRIVATE DOCTORS FOR REFERRING THE PATIENTS FOR DIAGNOSIS TO THE ASSESSEE COMPANY. IN BACKGROUND OF THESE FACTS AND ISSUES INVOLVED, THE HON'BLE HIGH COURT HELD THAT SAID PAYMENT OF COMMISSION IS WRONG AND IS OPPOSED TO BE A PUBLIC POLICY. IT SHOULD BE DISCOURAGED AS IT IS NOT A FAIR PRACTICE. THE RATIO OF SAID DECISION CANNOT BE APPLIED ON THE FACTS OF THE PRESENT CASE BECAUSE THERE IS N O VIOLATION OF ANY LAW OR ANYTHING WHICH IS OPPOSED TO PUBLIC POLICY. SIMILARLY, THERE IS REFER ENCE TO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ESKAYEF (NOW KNOWN AS SMITHKLINE BEE CHAM) PHARMACEUTICALS (INDIA) LIMITED V. CIT (2000) 111 TAXMAN 561(SC) , WHICH WAS GIVEN IN CONTEXT OF SECTION 37(3A) OF T HE ACT. IN THE SAID CASE THE ASSESSEE HAD CLAIMED EXPENDITURE ON DISTRIBUTION OF PHYSICIAN'S SAMPLES U/S. 37. IN THE BACKGROUND OF SUCH CLAIM THE HON'BLE APE X COURT HELD THAT, IF THE EXPENDITURE FALLS WITHIN THE BARE MINIMUM IT WILL NOT BE CAUGHT BY SU BSECTION (3A) OF SECTION 37. ON THE CONTRARY, THE HON'BLE APEX COURT OBSERVED THAT PHYSICIANS SAM PLES ARE NECESSARY TO ASCERTAIN THE EFFICACY OF MEDICINE AND INTRODUCE IT IN THE MARKET FOR CIRCULATION AND IT IS ONLY BY THIS METHOD THE PURPOSE IS ACHIEVED. IN SUCH CASES GIVING A PHY SICIAN SAMPLES FOR REASONABLE PERIOD IS ESSENTIAL TO THE BUSINESS OF MANUFACTURE AND SALE O F MEDICINE. IT IS ONLY IF A PARTICULAR MEDICINE HAS BEEN INTRODUCED BY THE MARKET AND ITS USES ARE ESTABLISHED THEN GIVING OF FREE SAMPLES COULD ONLY BE THE MEASURE OF SALE/PROMOTION AND DEV ELOPMENT WOULD THUS BE HIT BY SUBSECTION (3A). SAID DECISION NO WAY PROHIBITS THE NATURE OF EXPENDITURE WHICH HAS BEEN INCURRED IN THE CASE OF THE ASSESSEE. THEREFORE, SUCH A REFERENCE T O A HON'BLE APEX COURT DECISION IS NOT GERMANE TO THE ISSUE INVOLVED. THUS, IN OUR OPINION , THE AFORESAID DECISION OF THIS TRIBUNAL IS CLEARLY DISTINGUISHABLE AND CANNOT BE HELD TO BE AP PLICABLE AND ALSO WE HAVE ALREADY GIVEN OUR INDEPENDENT FINDING AS TO ALLOWABILITY OF EXPENSES IN THE HANDS OF THE ASSESSEE AS BUSINESS EXPENDITURE.' STILL FURTHER, THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF INDIA MEDTRONIC PVT. LTD. V. DCIT [2018] 52 CCH 43 (MUM), FOLLOWING THE VIEW TAKEN B Y THE TRIBUNAL IN THE CASE OF PHL PHARMA PVT. LTD. ( SUPRA ), HAD CONCLUDED THAT THE MCI GUIDELINES ARE ONLY A PPLICABLE TO THE DOCTORS AND THE MEDICAL PROFESSIONALS REGISTERED WI TH THE COUNCIL, AND CANNOT GOVERN THE OTHER TAX ENTITIES LIKE DRUG MANUFACTURING COMPANIES OR I NDIVIDUALS OTHER THAN THE DOCTORS. IN THE BACKDROP OF THE AFORESAID OBSERVATIONS, THE TRIBUNA L HAD OBSERVED THAT THE MCI GUIDELINES CANNOT DECIDE THE ALLOWABILITY OR OTHERWISE OF AN E XPENDITURE IN THE HANDS OF SUCH OTHER ENTITIES UNDER THE INCOME-TAX ACT, 1961. IT WAS FURTHER OBSE RVED BY THE TRIBUNAL THAT THE INCOME TAX ACT IS AN INDEPENDENT CODE IN ITSELF AND THE BUSINE SS INCOME OF AN ASSESSEE HAS TO BE ASSESSED AND TAXED AS ENVISAGED UNDER THE PROVISIONS OF THE ACT. ON THE BASIS OF THE LIMITED SCOPE OF APPLICABILITY OF THE MCI GUIDELINES TO A PARTICULAR CLASS OF THE SOCIETY VIZ . DOCTORS OR MEDICAL M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 23 PRACTITIONERS REGISTERED WITH THE COUNCIL, THE TRIB UNAL HAD CONCLUDED THAT THE GUIDELINES ISSUED BY MCI WOULD ONLY REGULATE THE CODE OF CONDUCT OF T HE DOCTORS AND THE MEDICAL PRACTITIONERS REGISTERED WITH IT AND WOULD NOT BE APPLICABLE TO O THER ENTITIES. 25. WE THUS, IN THE BACKDROP OF THE AFORESAID SETTL ED POSITION OF LAW AS REGARDS THE PROSPECTIVE APPLICABILITY OF AN OPPRESSIVE CIRCULAR, ARE OF THE CONSIDERED VIEW THAT AS THE CBDT AS PER ITS CIRCULAR NO. 5/2012, DATED 01.08.2012 HAD ENLARGED THE SCOPE OF INDIAN MEDICAL COUNCIL REGULATION, 2002, AND HAD MADE THE SAME APPLICABLE TO THE PHARMACEUTICAL COMPANIES, THUS THE SAME CANNOT BE RECKONED TO HAVE A RETROSPECTIVE EFF ECT. WE FIND THAT A COORDINATE BENCH OF THE TRIBUNAL VIZ. ITAT, MUMBAI IN THE CASE OF SYNCOM FORMULATIONS (I) LTD. V. DCIT -8(3), MUMBAI (ITA NO. 6428 & 6429/MUM/2012, DATED 23.12.2 015) FOR A.YS 2010-11 AND 2011-12 HAD CONCLUDED THAT THE AFORESAID CBDT CIRCULAR NO. 5/2012, DATED 01.08.2012 WOULD NOT BE APPLICABLE TO THE A.YS 2010-11 AND 2011-12, AS THE SAME WAS INTRODUCED W.E.F. 01.08.2012. WE THUS, IN TERMS OF OUR AFORESAID OBSERVATIONS ARE OF THE CONSIDERED VIEW THAT THE AFOREMENTIONED CBDT CIRCULAR NO. 5/2012, DATED 01.08.2012 WOULD NO T BE APPLICABLE TO THE CASE OF THE ASSESSEE BEFORE US FOR A.Y. 2011-12. 26. WE SHALL NOW ADVERT TO THE JUDICIAL PRONOUNCEME NTS WHICH HAD BEEN RELIED UPON BY THE LD. D.R BEFORE US : ( I ) DCIT, CIRCLE-13(1), NEW DELHI V. OCHOA LABORATORIES LTD., NOIDA (ITA NO. 4114/DEL/2009, DATED 25.08.2017) THAT THE AFORESAID ORDER PASSED BY THE ITAT, DELHI PERTAINED TO THE ALLOWABILITY OF EXPENSES INCURRED BY THE ASSESSEE IN RESPECT OF HOTEL BOOKIN GS AT NEW DELHI, COCHIN OR KOCHI AGAINST 'DERMACON CONFERENCE' AT HYDERABAD, PROVIDING FREE AIR TRAVEL, STAY AND FOOD IN HOTELS, LOCAL CAR CONVEYANCE ETC., WHICH WERE HELD BY THE TRIBUNA L AS BEING AKIN TO GIVING COMMISSIONS TO THE DOCTORS FOR PRESCRIBING MEDICINES MANUFACTURED BY THE ASSESSEE COMPANY. THE FACTS INVOLVED IN THE SAID CASE BEING DISTINGUISHABLE AS AGAINST THAT OF THE PRESENT ASSESSEE BEFORE US, THUS WOULD NOT ASSIST THE CASE OF THE REVENUE. ( II ) ACIT, CIRCLE-6(3), MUMBAI V. LIVA HEALTHCARE LTD. , MUMBAI (ITA NO. 904/MUM/2013, DATED 12.09.2016) IN THE AFORESAID ORDER PASSED BY THE COORDINATE BEN CH OF THE TRIBUNAL, EXPENSES WERE INCURRED BY THE ASSESSEE FOR CREATING GOOD RELATIONS WITH TH E DOCTORS IN LIEU OF EXPECTED FAVOURS FROM THEM FOR RECOMMENDING TO THE PATIENTS THE PHARMACEU TICALS PRODUCTS OF THE COMPANY. WE FIND THAT THE TRIBUNAL WHILE ADJUDICATING THE CASE OF DC IT-8(2), MUMBAI V. PHL PHARMA (P.) LTD. HAD CONSIDERED THE AFORESAID ORDER OF THE TRIBUNAL. ( III ) CONFEDERATION OF INDIAN PHARMACEUTICAL INDUSTRY (SS I) V. THE CENTRAL BOARD OF DIRECT TAXES (CWP NO. 10793 OF 2012, DATED 26.12.2012)(HP): WE FIND THAT THE AFORESAID JUDGMENT OF THE HON'BLE HIGH COURT OF HIMACHAL PRADESH WAS CONSIDERED BY THE ITAT, MUMBAI BENCH 'C', MUMBAI IN THE CASE OF DCIT-8(2), MUMBAI V. PHL PHARMA (P.) LTD. THE TRIBUNAL AFTER CONSIDERING THE AFORESAID JUDGME NT HAD OBSERVED THAT AS HELD BY THE HIGH COURT, IF THE ASSESSEE WAS ABLE TO ESTABLISH THAT T HE MCI REGULATION WAS NOT APPLICABLE TO THE ASSESSEE, THEN THE SAME COULD NOT BE BLINDLY APPLIE D IN ITS CASE. ( IV ) CIT V. KAP SCAN AND DIAGNOSTIC CENTRE (P.) LTD. [2012] 344 ITR 476 (P&H) : M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 24 WE FIND THAT THE JUDGMENT IN THE AFORESAID CASE WAS RENDERED IN CONTEXT OF THE COMMISSION PAID BY THE ASSESSEE-COMPANY WHICH WAS RUNNING A SCANNIN G AND A DIAGNOSTIC CENTRE TO THE PRIVATE DOCTORS FOR REFERRING PATIENTS FOR DIAGNOSIS/SCANNI NG. THUS, THE FACTS INVOLVED IN THE CASE BEFORE THE HIGH COURT ARE DISTINGUISHABLE AS AGAINST THOSE IN THE CASE OF THE ASSESSEE BEFORE US. STILL FURTHER, THE SAID JUDGMENT WAS ALSO CONSIDERED BY T HE TRIBUNAL WHILE PASSING THE ORDER IN THE CASE OF DCIT-8(2), MUMBAI V. PHL PHARMA (P.) LTD. 27. WE THUS, IN TERMS OF OUR AFORESAID OBSERVATIONS CONCLUDE THAT THE ASSESSEE WAS DULY ENTITLED FOR CLAIM OF SALES PROMOTION EXPENSES OF RS. 9,70,8 2,317/- INCURRED ON THE DISTRIBUTION OF ARTICLES TO THE STOCKISTS, DISTRIBUTORS, DEALERS, C USTOMERS AND DOCTORS. THUS, THE ORDER OF THE CIT(A) SUSTAINING THE DISALLOWANCE OF THE SALES PRO MOTION EXPENSES TO THE EXTENT OF RS. 66,49,685/- IS SET ASIDE. IN TERMS OF OUR AFORESAID OBSERVATIONS THE ENTIRE DISALLOWANCE OF THE SALES PROMOTION EXPENSES OF RS. 9,70,82,317/-MADE B Y THE AO IS DELETED. 28. THE APPEAL OF THE ASSESSEE VIZ. ITA NO. 5553/MU M/2014 IS ALLOWED AND THE APPEAL OF THE REVENUE VIZ . ITA NO. 6129/MUM/2014 IS DISMISSED. ITA NO. 5479 & 5747/MUM/2015 A.Y. 2012-13 29. WE SHALL NOW TAKE UP THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE FOR A.Y. 2012- 13. THE ASSESSEE ASSAILING THE ORDER PASSED BY THE CIT(A) TO THE EXTENT HE HAD SUSTAINED THE DISALLOWANCE OF SALES PROMOTION EXPENSES OF RS. 77, 42,416/-, HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL '1. FOR THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING DIS ALLOWANCE OF SALES PROMOTION EXPENSE AMOUNTING TO RS.77,42,416/-. 2. FOR THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT E XPENDITURE INCURRED FOR DISTRIBUTION OF COSTLY ARTICLES (EXCEEDING RS.750/- EACH ARTICLE) ARE FREEBIES TO DOCTORS AND PROFESSIONALS. 3. FOR THAT T HE LD. CIT(A) HAS ERRED IN HOLDING THAT THE SUCH EX PENDITURES (EXCEEDING RS.750/- EACH ARTICLES) HAVE BEEN INCURRED IN VIOLATION OF C BDT CIRCULAR NO. 5/2012 DATED 01.08.2012 AND ARE AGAINS T REGULATIONS ISSUED BY MEDICAL COUNSEL OF INDIA. 4. FOR THAT TH E LD. CIT(A) HAS ERRED IN HOLDING THAT SUCH EXPENDI TURES ARE PROHIBITED BY LAW AND THUS HIT BY EXPLANATION TO SE CTION 37(1). 5. FOR THAT THE SUSTENANCE OF DISALLOWANCE OF RS.77,42 ,416/- IS WRONG, ILLEGAL AND UNJUSTIFIED ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE APPELLANT'S CASE. 6. FOR THAT THE WHOLE ORDER SUSTAINING DISALLOWANCE OF RS.77,42,4161- IS BAD IN FACT AND LAW OF THE CASE AND IS FIT TO BE MODIFIED. 7. FOR THAT THE WHOLE ORDER IS BAD IN FACT AND LAW OF THE CASE AND IS FIT TO BE MODIFIED. 8. FOR THAT THE OTHER GROUNDS, IF ANY, SHALL BE URGED AT THE TIME OF HEARING OF THE APPEAL' 30. THE REVENUE ON THE OTHER HAND HAS ASSAILED THE ORDER OF THE CIT(A) FOR A.Y. 2012-13 ON THE GROUND THAT HE HAD ERRED IN DELETING THE DISALLOWAN CE OF SALES PROMOTION EXPENSES OF RS. 10,60,02,763/- BY RESTRICTING THE DISALLOWANCE OF T HE SAME ONLY IN RESPECT OF THE EXPENDITURE INCURRED BY THE ASSESSEE ON SALES PROMOTION ARTICLE S COSTING MORE THAN RS. 750/- PER ARTICLE, BY RAISING BEFORE US THE FOLLOWING GROUNDS APPEAL : M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 25 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUG NED IN THE GROUNDS ENUMERATED BELOW: 1. THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND FACT OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) HAS ERRED IN ALLOWING ALL SALES PROMOTION ARTICLES COST ING UP TO THE COST PRICE OF RS. 750/- EACH U/S. 37(1), ON THE GROUND THAT THESE ARE WHOLL Y AND EXCLUSIVELY IN CURRED FOR THE ASSESSEE'S BUSINESS PURPOSES WHEN SU PPORTING EVIDENCES HAVE NOT BEEN FURNISHED BY THE ASSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) HAS ERRED IN ALLOWING SALES PROMOTION EXPENSES, WITHOUT APPRECIAT ING THE PROHIBITION IMPOSED B THE MEDICAL COUNCIL OF INDIA ON MEDICAL PRACTITIONERS FROM ACCEPTING GIFTS, TRAVEL FACILITIES, HOSPITALIT Y, CASH OR MONETARY GRANTS (FREEBIES) FROM PHARMACEUTICAL AND ALLIED HEALTHCAR E SECTOR INDUSTRY AND THE CIRCULAR NO. 5/20 12 ISSUED BY CBDT NOT TO ALLOW SUCH EXPENSES WHICH ARE PROHIBITED BY LAW.' 31. BRIEFLY STATED, THE ASSESSEE-COMPANY HAD E-FILE D ITS RETURN OF INCOME FOR A.Y. 2012-13 ON 21.09.2012, DECLARING A TOTAL INCOME OF RS. 270,68, 80,787/-. THE CASE OF THE ASSESSEE WAS THEREAFTER TAKEN UP FOR SCRUTINY ASSESSMENT UNDER S EC. 143(2) OF THE ACT. THE A.O INTER ALIA CARRYING OUT A DISALLOWANCE OF RS. 11,37,45,179/- O F SALES PROMOTION EXPENSES ASSESSED THE INCOME OF THE ASSESSEE-COMPANY UNDER SEC. 143(3) AT RS. 282,06,25,970/-. THE BOOK PROFIT OF THE ASSESSEE UNDER SEC. 115JB WAS COMPUTED BY THE A .O AT RS. 365,71,93,685/-. THE A.O WHILE FRAMING THE ASSESSMENT HAD DISALLOWED THE ENTIRE AM OUNT OF SALES PROMOTION EXPENSES OF RS. 11,37,45,179/- FOR THE REASON VIZ . ( I ) THE MEDICAL COUNCIL OF INDIA (MCI) HAD IMPOSED PROHIBITION ON MEDICAL PRACTITIONERS FROM ACCEPTING GIFTS, TRAVEL FACILITIES, HOSPITALITIES, CASH OR MONETARY GRANTS (KNOWN AS 'FREEBIES') FROM PHARMACE UTICAL AND ALLIED HEALTH CARE SECTOR INDUSTRY; AND ( II ) THE CBDT CIRCULAR NO. 5/2012 ISSUED VIDE F.NO. 225/142/2012-ITA.II, DATED 01.08.2012 HAD CLARIFIED THAT SUCH 'FREEBIES' SHALL BE INADMISSIBLE UNDER SEC. 37(1) OF THE ACT, BEING AN EXPENSE PROHIBITED BY THE LAW. ON THE BASI S OF THE AFORESAID DELIBERATIONS THE A.O BEING OF THE VIEW THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON DISTRIBUTION OF 'FREEBIES' WAS INADMISSIBLE AS PER THE EXPLANATION TO SEC. 37(1) O F THE ACT, THUS DISALLOWED THE ENTIRE AMOUNT OF SALES PROMOTION EXPENSES OF RS. 11,37,45,179/- D EBITED BY THE ASSESSEE UNDER THE SAID HEAD OF EXPENDITURE. 32. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS ADVANCED BY THE ASS ESSEE BEFORE HIM, OBSERVED THAT THE ISSUE UNDER CONSIDERATION WAS SQUARELY COVERED BY THE ORD ER PASSED BY HIS PREDECESSOR WHILE DISPOSING OFF THE APPEAL OF THE ASSESSEE FOR THE IM MEDIATELY PRECEDING YEAR VIZ. A.Y. 2011-12. THE CIT(A) FOLLOWING THE VIEW TAKEN BY HIS PREDECES SOR, THUS RESTRICTED THE DISALLOWANCE OF THE SALES PROMOTION EXPENDITURE TO THE EXTENT OF RS. 77 ,42,416/- I.E THE EXPENDITURE WHICH WAS INCURRED BY THE ASSESSEE ON SALES PROMOTION ARTICLE S COSTING MORE THAN RS. 750/-PER ARTICLE. IN THE BACKDROP OF HIS AFORESAID OBSERVATIONS THE CIT( A) RESTRICTED THE DISALLOWANCE TO THE EXTENT OF RS. 77,42,416/- AND DELETED THE BALANCE ADDITION /DISALLOWANCE OF RS. 10,60,02,763/-[RS. 11,37,45,179/- (-) RS. 77,42,416/-]. 33. THAT BOTH THE ASSESSEE AND THE REVENUE BEING AG GRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER BY WAY OF CROSS APPEALS BEFORE U S. WE FIND THAT THE ISSUE INVOLVED IN THE PRESENT CASE VIZ . DISALLOWANCE OF SALES PROMOTION EXPENDITURE REMAI NS THE SAME, AS WAS THERE BEFORE US IN THE ASSESSES OWN CASE FOR THE IMMEDIAT ELY PRECEDING YEAR VIZ . A.Y. 2011-12 AS HAD M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 26 BEEN ADJUDICATED BY US HEREINABOVE, EXCEPT FOR THE FACT THAT IN THE PRESENT CASE THE CBDT CIRCULAR NO. 5/2012, DATED 01.08.2012 HAD CAME INTO FORCE DURING THE YEAR UNDER CONSIDERATION. BE THAT AS IT MAY, WE ARE OF THE CONSIDERED VIEW TH AT AS DELIBERATED BY US AT LENGTH HEREINABOVE, THE AFOREMENTIONED CBDT CIRCULAR NO. 5/2012, DATED 01.08.2012 HAD ENLARGED THE SCOPE OF MCI REGULATIONS AND MADE THE SAME APPLICABLE TO THE PHARMACEUTICAL COMPANIES, WITHOUT ANY ENABLING PROVISION EITHER UNDER THE INCOME TAX ACT OR THE INDIAN MEDICAL COUNCIL REGULATIONS. WE ARE OF THE CONSIDERED VIEW THAT AS OBSERVED BY U S HEREINABOVE, THE CBDT BY EXTENDING THE SCOPE AND GAMUT OF THE MCI REGULATION HAD BY SO DOI NG TRAVERSED BEYOND THE SCOPE OF ITS JURISDICTION AND PROVIDED CASUS OMISSUS TO THE REGU LATION ISSUED BY MCI, WHICH THOUGH HAD NOT BEEN EXPRESSLY PROVIDED THEREIN. WE THUS, BEING OF THE VIEW THAT AS THE CBDT IS DIVESTED OF ITS POWER TO CREATE A NEW IMPAIRMENT ADVERSE TO AN ASSE SSEE OR TO A CLASS OF ASSESSEE WITHOUT ANY SANCTION OR AUTHORITY OF LAW, THEREFORE, ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE RIGOURS CONTEMPLATED AS REGARDS THE PHARMACEUTICAL COMPANIES OR THE ALLIED HEALTHCARE SECTOR IN THE CBDT CIRCULAR NO. 5/2012, DATED 01.08.2012. WE WOULD NOT HESITATE TO OBSERVE THAT DESPITE AN ABSENCE OF ENLARGEMENT OF THE SCOPE OF T HE REGULATIONS ISSUED BY THE MCI UNDER THE MEDICAL COUNCIL ACT, 1956, THEREIN BRINGING WITHIN THE SWEEP OF ITS CODE OF CONDUCT THE PHARMACEUTICAL COMPANIES AND ALLIED HEALTH SECTOR I NDUSTRY, THE CBDT HAD HOWEVER IN ALL ITS WISDOM PROVIDED THAT IN CASE A PHARMACEUTICAL OR AL LIED HEALTH SECTOR INDUSTRY INCURS ANY EXPENDITURE IN PROVIDING ANY GIFT, TRAVEL FACILITY, CASH, MONETARY GRANT OR SIMILAR FREEBIES TO MEDICAL PRACTITIONERS AND THEIR PROFESSIONAL ASSOCI ATIONS IN VIOLATION OF THE INDIAN MEDICAL COUNCIL (PROFESSIONAL CONDUCT, ETIQUETTE AND ETHICS ) REGULATIONS, 2002, THE SAME SHALL BE DISALLOWED IN THE HANDS OF SUCH PHARMACEUTICAL OR A LLIED HEALTH SECTOR INDUSTRY. WE ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE BURDEN IM POSED BY THE CBDT VIDE ITS AFORESAID CIRCULAR NO. 5/2012, DATED 01.08.2012 ON THE PHARMA CEUTICAL OR ALLIED HEALTHCARE SECTOR INDUSTRIES, WHICH AS OBSERVED BY US HEREINABOVE, DE SPITE THERE BEING AN ABSENCE OF ANY ENABLING PROVISIONS UNDER THE INCOME TAX LAW OR THE INDIAN M EDICAL COUNCIL REGULATIONS, THEREIN CONTEMPLATING AN AUTHORITY TO REGULATE THE CONDUCT OF THE PHARMACEUTICAL AND ALLIED HEALTH SECTOR INDUSTRIES, HAD CLEARLY IMPINGED ON THE COND UCT OF BUSINESS BY THE LATTER. WE THUS, IN THE ABSENCE OF ANY SANCTION OR AUTHORITY OF LAW ON THE BASIS OF WHICH IT COULD SAFELY BE CONCLUDED THAT THE ASSESSEE-COMPANY WHICH IS ENGAGED IN THE B USINESS OF MANUFACTURING AND SALE OF PHARMACEUTICALS AND ALLIED PRODUCTS, HAD IN THE GAR B OF SALES PROMOTION EXPENSES INCURRED EXPENDITURE IN RESPECT OF ARTICLES DISTRIBUTED TO T HE STOCKISTS, DISTRIBUTORS, DEALERS, CUSTOMERS AND DOCTORS, FOR A PURPOSE WHICH IS EITHER AN OFFENCE O R PROHIBITED BY LAW, ARE THUS OF THE CONSIDERED VIEW THAT SUCH EXPENDITURE INCURRED BY THE ASSESSEE WOULD NOT BE HIT BY THE EXPLANATION TO SEC. 37(1) OF THE ACT. 34. WE THUS, IN TERMS OF OUR AFORESAID OBSERVATIONS CONCLUDE THAT THE ASSESSEE WAS DULY ENTITLED FOR CLAIM OF SALES PROMOTION EXPENSES OF RS. 11,37, 45,179/- INCURRED ON THE DISTRIBUTION OF ARTICLES TO THE STOCKISTS, DISTRIBUTORS, DEALERS, C USTOMERS AND DOCTORS. THUS, THE ORDER OF THE CIT(A) SUSTAINING THE DISALLOWANCE OF THE SALES PRO MOTION EXPENSES TO THE EXTENT OF RS, 77,42,416/- IS SET ASIDE. THE ENTIRE DISALLOWANCE O F THE SALES PROMOTION EXPENSES OF RS. 11,37,45,179/- MADE BY THE A.O IS DELETED.' THIS DECISION HAS SUBSEQUENTLY BEEN FOLLOWED BY TRI BUNAL IN CROSS- APPEALS FOR AY 2013-14 VIDE ITA NOS.5807,6223/MUM/2 017 ORDER DATED 28/06/2019. THEREFORE, FACTS BEING PARI-MATERIA THE SAME, RESPECTFULLY FOLLOWING THE AFORESAID CONSISTENT VIEW OF THE TRIB UNAL, WE HOLD THAT THE M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 27 ENTIRE EXPENDITURE OF RS.1498.07 LACS INCURRED BY A SSESSEE ON SALES PROMOTIONAL ARTICLE WOULD BE AN ALLOWABLE DEDUCTION . THE GROUNDS RAISED BY THE ASSESSEE, IN THIS REGARD STAND ALLOWED WHERE AS THE GROUNDS RAISED BY REVENUE STAND DISMISSED. THE IMPUGNED ORD ER STAND MODIFIED TO THAT EXTENT. 5.1 REGARDING DISALLOWANCE OF MEDICAL CONFERENCE EX PENDITURE, IT IS THE SUBMISSIONS OF LD. SR. COUNSEL THAT THIS EXPENDITUR E WAS NEVER DISALLOWED IN EARLIER YEARS BUT THE SAME HAS BEEN D ISALLOWED FOR THE FIRST TIME IN THIS YEAR. NEVERTHELESS, SINCE THE REASONIN G APPLIED BY REVENUE TO DISALLOW THE SAME IS PARI-MATERIA THE SAME AS APPLIED WHILE DISALLOWING EXPENDITURE ON SALES PROMOTIONAL ARTICL ES, THE ARGUMENTS AS WELL AS RELIANCE ON VARIOUS JUDICIAL PRONOUNCEMENTS AS ADVANCED TO CONTEST THAT EXPENDITURE, WOULD EQUALLY APPLY TO TH IS ISSUE ALSO. FOR THE SAID SUBMISSIONS, THE LD. SR. COUNSEL DREW OUR ATTE NTION TO THE ASSESSMENT ORDERS PASSED U/S 143(3) FOR AYS 2008-09 TO 2013-14 AS PLACED IN SEPARATE PAPER-BOOK. IT HAS FURTHER BEEN SUBMITTED THAT LD. CIT INITIATED PROCEEDINGS U/S 263 FOR AYS 2012-13 & 201 3-14 ON THE GROUND THAT THESE EXPENSES WERE HIT BY REGULATION OF MCI, CIRCULAR OF CBDT AND EXPLANATION TO SECTION 37 AND THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE OWING TO NON-DISALLOWANCE OF THE SAME BY LD. AO. BUT THE SAID ORDER COULD NOT SUCCEE D THE TEST OF JUDICIAL SCRUTINY AND HAS ALREADY BEEN QUASHED BY THE TRIBUN AL VIDE ITS ORDER DATED 07/12/2018. 5.2 THE LD. SR. COUNSEL ALSO SUBMITTED THAT IN TERM S OF SECTION 20A AND SEC. 33 OF INDIAN MEDICAL COUNCIL ACT, 1956, MC I IS EMPOWERED TO ISSUE REGULATION ON PROFESSIONAL CONDUCT AND ETIQUE TTE TO BE OBSERVED BY M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 28 MEDICAL PROFESSIONALS ONLY AND ITS SCOPE COULD NOT BE EXTENDED BEYOND REGISTERED MEDICAL PRACTITIONER OWING TO INHERENT P ROHIBITION CONTAINED IN SECTION 20A AND SEC. 33(M) BY WHICH THE PARLIAMENT HAS AUTHORIZED MCI TO FRAME REGULATIONS ON CONDUCT OF MEDICAL PRAC TITIONER ONLY. THIS ACT NOWHERE ATTEMPTS TO REGULATE OR GOVERN THE PHAR MACEUTICAL COMPANIES. THEREFORE, CBDT CIRCULAR NO. 05/2012 COU LD NOT ENLARGE THE SCOPE OF MCI REGULATION BY MAKING IT APPLICABLE TO PHARMACEUTICAL COMPANIES WITHOUT THERE BEING ANY ENABLING PROVISIO N EITHER UNDER THE INCOME TAX ACT OR UNDER THE INDIA MEDICAL COUNCIL R EGULATION, AS OBSERVED BY TRIBUNAL IN ASSESSEES OWN CASE FOR AYS 2011-12 & 2012- 13 AS WELL AS IN THE CASE OF DCIT V/S PHL PHARMA LIMITED (ITA NO. 4605/MUM/2014 ORDER DATED 12/01/2017). IN THE ABOVE BACKGROUND, LD. SR. COUNSEL PLEADED THAT THE NATURE OF EXPENDITURE WAS CLEARLY NOT HIT BY EXPLANATION TO SECTION 37(1) AND THEREFORE, THE DIS ALLOWANCE MADE BY REVENUE WAS UNJUSTIFIED. ON THE OTHER HAND, LD. DR SUPPORTED THE FINDINGS OF LD. CIT(A) IN THE IMPUGNED ORDER. 5.3 UPON CAREFUL CONSIDERATION, WE FIND THAT THIS D ISALLOWANCE OF MEDICAL CONFERENCE EXPENDITURE HAS BEEN MADE BY LD. AO ON SIMILAR REASONING & LOGIC AS HAS BEEN APPLIED WHILE DISALLO WING EXPENDITURE ON SALES PROMOTIONAL ARTICLES. THIS DISALLOWANCE HAS B EEN MADE FOR THE FIRST TIME IN THIS YEAR WHICH IS EVIDENT FROM ASSESSMENT ORDERS FOR AY 2008- 09 TO 2013-14, AS PLACED ON RECORD. IN OTHER WORDS, THE GENUINENESS OF THE EXPENDITURE WAS NEVER UNDER DOUBT EITHER IN EAR LIER ASSESSMENT YEARS OR IN THE YEAR UNDER CONSIDERATION. THE REASO NING APPLIED BY LOWER AUTHORITIES TO DISALLOW THE SAME STEM FROM SAME REA SONING & LOGIC AS APPLIED TO DISALLOW EXPENDITURE ON SALES PROMOTIONA L ARTICLES. THIS BEING M/S. ARISTO PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR :2014-15 29 THE CASE, OUR ADJUDICATION AS WELL AS RELIANCE ON O RDERS OF TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER YEARS AS WELL AS RE LIANCE ON THE DECISION OF THIS TRIBUNAL IN DCIT V/S PHL PHARMA LIMITED (SUPRA) (WHICH HAS BEEN CO-AUTHORED BY ONE OF US) WOULD EQUALLY APPLY TO THIS ISSUE ALSO. THEREFORE, CONVINCED WITH VARIOUS ARGUMENTS RAISED BY LD. SR. COUNSEL AS ENUMERATED BY US IN PRECEDING PARAGRAPHS AND RES PECTFULLY FOLLOWING THE EARLIER DECISIONS OF TRIBUNAL, WE DIRECT FOR DE LETION OF DISALLOWANCE OF MEDICAL CONFERENCE EXPENDITURE AS SUSTAINED BY LEAR NED FIRST APPELLATE AUTHORITY. RESULTANTLY, THE GROUNDS RAISED BY THE A SSESSEE STANDS ALLOWED. 6. FINALLY, THE APPEAL OF THE REVENUE STAND DISMISS ED WHEREAS THE APPEAL OF THE ASSESSEE STANDS ALLOWED IN TERMS OF O UR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY, 2020. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 15/01/2020 SR.PS, JAISY VARGHESE $%&'(' / COPY OF THE ORDER FORWARDED TO : 1. '# / THE APPELLANT 2. $%'# / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. -. $'/ , / , / DR, ITAT, MUMBAI 6. .012 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.