M/s. Seamark Bio Organic Pvt. Ltd., Bhubaneswar V. ACIT, Circle-1(1), Cuttack

ITA 252/CTK/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3844 (ITAT-CUTTACK)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-04-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 04-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A TIGGA
• Assessee Lawyers: P K MISHRA
• Keywords: Gift; Business income; Business expenditure; Opportunity of being heard; Principle of natural justice; Retrospective amendment; Revenue expenditure; Capital expenditure
• Section: 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH , CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND KULDIP SINGH JUDICIAL MEMBER ITA NO.252 /CTK/2016 ASSESSMENT YEAR : 2012 - 13 M/S SEAMARK BIO ORGANIC PVT LTD., AT: MARUTIVILLA, PATIA, PLOT NO.12/D, BHUBANESWAR. VS. ACIT, CIRCLE 1(1), CUTTACK PAN/GIR NO. AAHCS 9573 L (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.K.MISHRA REVENUE BY : SHRI A.TIGGA, DR DATE OF HEARING : 25 /04/ 2017 DATE OF PRONOUNCEMENT : 28 /04/ 2017 O R D E R PER N.S.SAINI, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - CUTTACK, DATED 31.3.2016 FOR THE ASSESSMENT YEAR 2012 - 13 . 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE LD CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER DISALLOWING RS.1,02,29,795/ - UNDER THE HEAD SALES PROMOTION EXPENSES. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS DEBITED RS.1,02,29,795/ - UNDER THE HEAD SALES PROMOTION EXPENSES. THE ASSESSING OFFICE R REQUIRED THE ASSESSEE TO FURNISH 2 ITA NO.252 /CTK/2016 ASSESSMENT YEAR : 2012 - 13 PARTICULARS ALONGWITH CORROBORATIVE EVIDENCE TO SUBSTANTIATE SUCH EXPENSES CLAIMED. THE ASSESSEE FURNISHED BEFORE THE ASSESSING OFFICER A LIST IN RESPECT OF SALES PROMOTION EXPENSES CONTAINING AREA, DOCTOR S NAME AND AMOUNT PAID BUT DID NOT FURNISH THE REASON WHY SUCH AMOUNT WAS PAID TO DOCTORS. ACCORDING TO THE ASSESSEE, THE COMPANY HAS RECRUITED A NUMBER OF MEDICINE REPRESENTATIVES ON VARIOUS DISTRICTS OF ODISHA, WEST BENGAL, ASSAM AND CHHATISGARH FOR MA RKETING ITS PRODUCTS. THE COMPANY HAS A POLICY TO TRAIN THE MEDICINE REPRESENTATIVES THROUGH VARIOUS DOCTORS TO MAKE THEM A W ARE ABOUT THE PRODUCT, COMPOSITION AND TYPE OF DISEASES WHICH WOULD BE BENEFICIAL TO THE MEDICINE REPRESENTATIVES TO MARKET THE PROD UCTS. THE COMPANY REIMBURSED THE EXPENSES TO VARIOUS DOCTORS FROM TIME TO TIME FOR CONDUCTING SUCH TYPE OF TRAININGS WHICH HAS BEEN REFLECTED UNDER THE HEAD SALES PROMOTION EXPENSES. FURTHER, THE ASSESSEE SUBMITTED THAT IT HAS REIMBURSED THE EXPENSES TO V ARIOUS DOCTORS RELATING TO CLINICAL TRIALS, SCIENTIFIC INFORMATION ANALYSIS CHARGES, PILOT BIO STUDY EXPENSES AND OTHER RELATED EXPENSES FOR DEVELOPMENT OF VARIOUS NEW PRODUCTS OF THE COMPANY FROM TIME TO TIME. THESE EXPENSES HAVE BEEN BOOKED UNDER SALES P ROMOTION EXPENSES. THE ASSESSEE ALSO STATED THAT THE AMOUNTS OF SALES PROMOTION EXPENSES WERE PAID TO VARIOUS PRIVATE PRACTICING DOCTORS WHO PROMOTE THE MEDICINE PRODUCTS OF THE ASSESSEE FOR BETTER MARKETING. 4. THE ASSESSING OFFICER FOUND THAT THE EXPENDI TURE AND THE NATURE OF WHI CH HAS BEEN EXPLAINED BY THE ASS ESSEE IS NOT INCIDENTAL TO THE 3 ITA NO.252 /CTK/2016 ASSESSMENT YEAR : 2012 - 13 BUSINESS AND WAS NOT EXPENDED WHOLLY AND EXCLUS IVELY FOR THE PURPOSE OF BUSINESS. ACCORDING TO THE ASSESSING OFFICER, A S PER EXPLANATION TO SECTION 37{1 ) OF THE ACT , ANY EXPENDITURE 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 BUSINESS OR PROFESSION AND NO DEDUCTION OR ALLOWANCE SHALL BE MADE IN RESPECT OF SUCH EXPENDITURE. THE ASSESSING OFFICER HAD MENTIONED THE AMENDED INDIAN MEDICAL COUNCIL (PROFESSIONAL CONDUCT,, ETIQUETE AND ETHICS) REGULATION, 2002 THAT A MEDICAL PRA CTITIONER SHALL NOT RECEIVE ANY GIFT FROM ANY PHARMACEUTICAL OR ALLIED HEALTH CARE INDUSTR Y AND THEIR SALES PEOPLE OR REPRESENTATIVES . SIMILARLY A MEDICAL PRACTITIONER SHALL NOT ACCEPT ANY TRAVEL FACILITY OR HOSPITALITY OF .MY K IND INSIDE THE COUNTRY OR OUTSIDE FROM ANY PHARMACEUTICAL OR ALLIED HEALTH CARE INDUSTRY FOR VACATION OR FOR ATTENDI NG CONFERENCE, SEMINARS, WORK SHOP ETC. THE ASSESSING OFFICER NOTED THAT A S PER SECTION 37(1) OF THE ACT , IF THESE EXPENSES ARE DEBITED AS SALES PROMOTION FOR SPONSORSHIP EXPENDITURE , THE SAME SHOULD BE INADMISSIBLE EXPENDITURE VIDE EXPLANATION TO SECTION 37(1 ) OF THE ACT. THE ASSESSING OFFICER RELIED ON THE CIRCULAR N O.5/2012 DATED 01.08,2012 OF CB DT , WHERE IT HAS BEEN STATED THAT DISALLOWING EXPENDITURE ON FREEBIES TO MEDICAL PRACTITIONER IS VALID AND THE CLAIM SHOULD BE INADMISSIBLE U/S,37(1 ) OF THE AC T BEING AN EXPENSE PROHIBITED BY THE LAW. THEREFORE, HE DISALLOWED THE DEDUCTION TO THE ASSESSEE. 5. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 4 ITA NO.252 /CTK/2016 ASSESSMENT YEAR : 2012 - 13 6. BEFORE US, LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS RELIED ON THE DECISION OF MUMBAI BENCHES OF THE TRIBUNAL IN THE CASE OF DCIT VS. PHL PHARMA PVT LTD. IN ITA NO.4605/MUM/2014 FOR ASSESSMENT YEAR 2010 - 2011 ORDER DATED 12.1.2017 AND SUBMITTED THAT SIMILAR EXPENSES HAVE BEEN ALLOWED BY THE TRIBUNAL IN THAT CASE. THEREFORE, FOLLO WING HE SAME THE EXPENSES OF THE ASSESSE ARE ALSO TO BE ALLOWED. 7. ON THE OTHER HAND, LD D.R. RELIED ON THE ORDERS OF LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. WE FIND THE SUBMISSION OF THE ASSESSEE IS THAT THE NATURE OF THE EXPENSES INCURRED UNDER THE SALES PROMOTION EXPENSES OF RS.1,02,29,795/ - WAS REIMBURSED TO VARIOUS DOCTORS RELATING TO CLINICAL TRIALS, SCIENTIFIC INFORMATION ANALYSIS CHARGES, PILOT BIO ST UDY EXPENSES AND OTHER RELATED EXPENSES FOR DEVELOPMENT OF VARIOUS NEW PRODUCTS OF THE COMPANY FROM TIME TO TIME AND, THEREFORE, THEY ARE NOT FREEBIES GIVEN TO DOCTORS AND THE EXPENSES ARE WHOLLY AND EXCLUSIVELY INCURRED FOR THE BUSINESS OF THE ASSESSEE AND HENCE, ALLOWABLE U/S.37(1) OF THE ACT AND COVERED BY THE DECISION OF THE MUMBAI BENCHES OF THE TRIBUNAL IN THE CASE OF PHL PHARMA P LTD. (SUPRA), WHEREIN, IT HAS BEEN HELD AS UNDER: 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS MADE BY LD. CIT DR AS W ELL 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 CO MPANY) IS HIT BY EXPLANATION 1 BELOW SECTION 37(1) IN VIEW OF CBDT CIRCULAR DATED 01.08.2012, INTERPRETING THE AMENDMENT DATED 10.12.2009 BROUGHT IN INDIAN MEDICAL COUNCIL REGULATION 2002 OR NOT. THE 5 ITA NO.252 /CTK/2016 ASSESSMENT YEAR : 2012 - 13 BREAK - UP OF SALES PROMOTION EXPENSES, WHICH HAS BEEN DIS ALLOWED BY THE AO, ARE AS UNDER: SR. NO. PARTICULARS OF EXPENSES AMOUNT IN (RS.) 1. CUSTOMER RELATIONSHIP MANAGEMENT EXP.(CRM) 7,61,96,260 2. KEY ACCOUNT MANAGEMENT EXP.(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 EXPLAINED 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 SECTOR INDUSTRY . CIRCULAR NO. 5/2012 [F. NO. 225/142/2012 - ITA.II], DATED 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 REGULATIONS ISSUED BY MED ICAL COUNCIL OF INDIA (THE 'COUNCIL') WHICH IS A REGULATORY BODY CONSTITUTED UNDER THE MEDICAL COUNCIL ACT, 1956. 2. THE COUNCIL IN EXERCISE OF ITS STATUTORY POWERS AMENDED THE INDIAN MEDICAL COUNCIL (PROFESSIONAL CONDUCT, ETIQUETTE AND ETHICS) REGULATION S, 2002 (THE REGULATIONS) ON 10 - 12 - 2009 IMPOSING A PROHIBITION ON THE MEDICAL PRACTITIONER AND THEIR PROFESSIONAL ASSOCIATIONS FROM TAKING ANY GIFT, TRAVEL FACILITY, HOSPITALITY, CASH OR MONETARY GRANT FROM THE PHARMACEUTICAL AND ALLIED HEALTH SECTOR INDUS TRIES. 3. SECTION 37(1) OF INCOME TAX ACT PROVIDES FOR DEDUCTION OF ANY REVENUE EXPENDITURE (OTHER THAN THOSE FAILING UNDER ITA NO.4605/MUM/2014 M/S. PHL PHARMA PVT. LTD. 10 SECTIONS 30 TO 36) FROM THE 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 CLAIM OF ANY SUCH EXPENSE, IF THE SAME HAS BEEN INCURRED FOR A PURPOSE WHICH IS EITHER AN OFFENCE OR PROHIBITED BY LAW. THUS, THE CLAIM OF ANY EXPENSE INCURRED IN PROVIDING ABOVE MENTIONED OR SIMILAR FREEBEES IN VIOLATION OF THE PROVISIONS OF INDIAN MEDICAL COUNCIL (PROFESSIONAL CONDUCT, ETIQUETTE AND ETHICS) REGULATIONS, 2002 SHALL BE INADMISSIBLE UNDER SECTION 37(1) OF THE INCOME TAX ACT BEING AN EXPENSE PROHIBITED BY THE LAW. THIS DISALLOWANCE SHALL BE MADE IN THE HANDS OF SUCH PHARMACEUTICAL OR ALLIED HEALTH SECTOR INDUSTRIES OR OTHER ASSESSEE WHICH HAS PROVIDED AFORESAID FREEBEES AND CLAIMED IT AS A DEDUCTIBLE EXPENSE IN ITS ACC OUNTS AGAINST INCOME. 6 ITA NO.252 /CTK/2016 ASSESSMENT YEAR : 2012 - 13 4. IT IS ALSO CLARIFIED THAT THE SUM EQUIVALENT TO VALUE OF FREEBEES ENJOYED BY THE AFORESAID MEDICAL PRACTITIONER OR PROFESSIONAL ASSOCIATIONS IS ALSO TAXABLE AS BUSINESS INCOME OR INCOME FROM OTHER SOURCES AS THE CASE MAY BE DEPEND ING ON THE FACTS OF EACH CASE. THE ASSESSING OFFICERS OF SUCH MEDICAL PRACTITIONER OR PROFESSIONAL ASSOCIATIONS SHOULD EXAMINE THE SAME AND TAKE AN APPROPRIATE ACTION. THIS MAY BE BROUGHT TO THE NOTICE OF ALL THE OFFICERS OF THE CHARGE FOR NECESSARY ACTIO N. FROM THE PERUSAL OF THE AFORESAID BOARD CIRCULAR, IT CAN BE SEEN THAT HEAVY RELIANCE HAS BEEN PLACED BY THE CBDT ON THE CIRCULARS ISSUED BY THE MEDICAL COUNCIL OF INDIA, WHICH IS THE REGULATORY BODY CONSTITUTED UNDER THE MEDICAL COUNCIL ACT, 1956. ON E 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 ETHICS FOR REGISTERED MEDICAL PRACTITIONERS ONLY. CHAPTER 6 OF THE SAID REGULATION/NOTIFICATION DEALS WITH UNETHICAL ACTS, WHEREBY A PHYSICIAN OR MEDICAL 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. CLAUS E 6.8 HAS BEEN ADDED (BY WAY OF AMENDMENT DATED 10.12.2009) IN TERMS OF NOTIFICATION PUBLISHED ON 14.12.2009 IN GAZETTE OF INDIA. THE SAID CLAUSE READS AS UNDER: - 6.8 CODE OF CONDUCT FOR DOCTORS AND PROFESSIONAL ASSOCIATION OF DOCTORS IN THEIR RELATIONSH IP WITH PHARMACEUTICAL AND ALLIED HEALTH SECTOR INDUSTRY. 6.8.1 IN DEALING WITH PHARMACEUTICAL AND ALLIED HEALTH SECTOR INDUSTRY, A MEDICAL PRACTITIONER SHALL FOLLOW AND ADHERE TO THE STIPULATIONS GIVEN BELOW: A) GIFTS: A MEDICAL PRACTITIONER SHALL NOT R ECEIVE ANY GIFT FROM ANY PHARMACEUTICAL OR ALLIED HEALTH CARE INDUSTRY AND THEIR 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 HEALTHCARE INDUSTRY OR THEIR REPRESENTATIVES FOR SELF AND FAMILY MEMBERS FOR VACATION OR FOR ATTENDING CONFERENCES, SEMINARS, WORKSHOPS, CME PROGRAMME ETC AS A DELEGATE C) HOSPITALITY: A MEDICAL PRACTITIONER SHALL NOT ACCEPT INDIVIDUALLY ANY HOSPITALITY LIKE HOTEL ACCOMMODATION FOR SELF AND FAMILY MEMBERS UNDER ANY PRETEXT. D) CASH OR MONETARY GRANTS: A MEDICAL PRACTITIONER SHALL NOT RECEIVE ANY CASH OR MONETARY GRANTS FROM ANY PHARMACE UTICAL AND ALLIED HEALTHCARE INDUSTRY FOR INDIVIDUAL PURPOSE IN 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 B Y SUCH APPROVED INSTITUTIONS, IN A TRANSPARENT MANNER. IT SHALL ALWAYS BE FULLY DISCLOSED. E) MEDICAL RESEARCH: A MEDICAL PRACTITIONER MAY CARRY OUT, PARTICIPATE IN WORK, IN RESEARCH PROJECTS FUNDED BY PHARMACEUTICAL AND ALLIED 7 ITA NO.252 /CTK/2016 ASSESSMENT YEAR : 2012 - 13 HEALTHCARE INDUSTRIES. A ME DICAL PRACTITIONER IS OBLIGED TO KNOW THAT THE FULFILMENT OF THE FOLLOWING ITEMS (I) TO (VII) WILL BE AN IMPERATIVE FOR UNDERTAKING ANY RESEARCH ASSIGNMENT / PROJECT FUNDED BY INDUSTRY FOR BEING PROPER AND ETHICAL. THUS, IN ACCEPTING SUCH A POSITION A MEDI CAL PRACTITIONER SHALL: - (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 CLEARANCE OF NATIONAL/ STATE / INSTITUTIONAL ETHICS COMMITTEES / BODIES. (III) ENSURE THAT IT FULFILS ALL THE LEGAL REQUIREMENTS PRESCRIBED FOR MEDICAL RESEARCH. (IV) ENSURE THAT THE SOURCE AND AMOUNT O F FUNDING IS PUBLICLY DISCLOSED AT THE BEGINNING ITSELF. (V) ENSURE THAT PROPER CARE AND FACILITIES ARE PROVIDED TO HUMAN VOLUNTEERS, IF THEY ARE NECESSARY FOR THE RESEAR CH PROJECT(S). (VI) ENSURE THAT UNDUE ANIMAL EXPERIMENTATIONS ARE NOT DONE AND WHEN THESE ARE NECESSARY THEY ARE DONE IN A SCIENTIFIC AND A HUMANE WAY. (VII) ENSURE THAT WHILE ACCEPTING SUCH AN ASSIGNMENT A MEDICAL PRACTITIONER SHALL HAVE THE FREEDOM TO PUBLISH THE RES ULTS OF THE RESEARCH IN THE GREATER INTEREST OF THE SOCIETY BY INSERTING SUCH A CLAUSE IN THE MOU OR ANY OTHER DOCUMENT / AGREEMENT FOR ANY SUCH ASSIGNMENT. F) MAINTAINING PROFESSIONAL AUTONOMY: IN DEALING WITH PHARMACEUTICAL AND ALLIED HEALTHCARE INDUSTR Y A MEDICAL PRACTITIONER SHALL ALWAYS ENSURE THAT THERE SHALL NEVER BE ANY COMPROMISE EITHER WITH HIS / HER OWN PROFESSIONAL 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 CONSULTANTS, AS RESEARCHERS, AS TREATING DOCTORS OR IN ANY OTHER PROFESSIONAL CAPACITY. IN DOING SO, A MEDICAL PRACTITIONER SHALL ALWAYS: (I) ENSURE THAT HIS PROFESSIONAL INTEGRITY A ND 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 ENDORSE 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 SCIENTIFIC BODIES OR PUBLISHED IN APPROPRIATE SCIENT IFIC JOURNALS IN A PROPER WAY.[EMPHASIS ADDED IS OURS 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 CONDUCT ENSHRINED THEREIN IS MEANT TO BE FOLLOWED AND AD HERED BY MEDICAL PRACTITIONERS/DOCTORS 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 INDUSTRY. IT PROVIDES GUIDELINES TO THE M EDICAL PRACTITIONERS OF THEIR ETHICAL CODES AND MORAL CONDUCT. NOWHERE THE REGULATION OR THE NOTIFICATION MENTIONS 8 ITA NO.252 /CTK/2016 ASSESSMENT YEAR : 2012 - 13 THAT SUCH A REGULATION OR CODE OF CONDUCT WILL COVER PHARMACEUTICAL COMPANIES OR HEALTH CARE SECTOR IN ANY MANNER. THE DEPARTMENT HAS NOT BRO UGHT 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 CONTRARY, BEFORE US THE LEARNED SENIOR COUNSEL, SHRI MISTRY BROUGHT TO OUR NOTICE THE JUDGMENT OF H ONBLE DELHI HIGH COURT IN THE CASE OF MAX HOSPITAL VS. MCI IN WPC 1334/2013 JUDGMENT DATED 10.01.2014, WHEREIN THE MEDICAL COUNCIL OF INDIA ADMITTED THAT THE INDIAN MEDICAL 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 READS AS UNDER: 6. THE PETITIONER'S GRIEVANCE IS TWOFOLD. FIRSTLY, THAT SINCE THE MEDICAL COUNCIL OF INDIA (PROFESSIONAL CONDUCT, ETIQUETTE AND ETHICS) REGULATIONS, 2002 (THE REGULATIONS) HAVE BEEN FRAMED ITA NO.4605/MUM/2014 M/S. PHL PHARMA PVT. LTD. 15 IN EXERCISE OF THE POWER CONFERRED UNDER SECTION 20 - A READ WITH SECTION 33 (M) OF THE INDIAN MEDICAL COUNCIL ACT, 1956, THESE REGULATIONS DO NOT GOVERN OR HAVE ANY CO NCERN WITH THE FACILITIES, INFRASTRUCTURE OR RUNNING OF THE HOSPITALS AND SECONDLY, THAT THE ETHICS COMMITTEE OF THE MCI ACTING UNDER THE REGULATIONS HAD NO JURISDICTION TO PASS ANY DIRECTION OR JUDGMENT ON THE INFRASTRUCTURE OF ANY HOSPITAL WHICH POWER RE STS SOLELY WITH THE CONCERNED STATE GOVT. THE CASE OF THE PETITIONER IS THAT THE PETITIONER HOSPITAL IS GOVERNED BY THE DELHI NURSING HOMES REGISTRATION ACT, 1953. IT IS URGED THAT IN FACT, AN INSPECTION WAS ALSO CARRIED OUT ON 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 NECESSARY 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 RESPONDENTS, 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 GRIE VANCE 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 A NY ORDER AGAINST THE PETITIONER HOSPITAL. THUS, I NEED NOT GO INTO THE QUESTION WHETHER THE ADEQUATE INFRASTRUCTURE FACILITIES FOR APPROPRIATE POST - OPERATIVE CARE WERE IN FACT IN EXISTENCE OR NOT IN THE PETITIONER HOSPITAL AND WHETHER THE PRINCIPLES OF NAT URAL JUSTICE HAD BEEN FOLLOWED OR NOT WHILE PASSING THE IMPUGNED ORDER. SUFFICE IT TO SAY THAT THE OBSERVATIONS DATED 27.10.2012 MADE BY THE ETHICS COMMITTEE DO REFLECT UPON THE INFRASTRUCTURE FACILITIES AVAILABLE IN THE PETITIONER HOSPITAL AND SINCE IT HA D 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 RE GULATION AGAINST ANY HOSPITAL OR ANY HEALTH CARE SECTOR UNDER ITS 2002 REGULATION. SO ONCE THE INDIAN MEDICAL COUNCIL REGULATION DOES NOT HAVE ANY 9 ITA NO.252 /CTK/2016 ASSESSMENT YEAR : 2012 - 13 JURISDICTION NOR HAS ANY AUTHORITY UNDER LAW UPON THE PHARMACEUTICAL COMPANY OR ANY ALLIED HEALTH SECTOR INDU STRY, THEN SUCH A REGULATION CANNOT HAVE ANY PROHIBITORY EFFECT ON THE PHARMACEUTICAL COMPANY LIKE THE ASSESSEE. IF MEDICAL COUNCIL REGULATION DOES NOT HAVE ANY JURISDICTION UPON PHARMACEUTICAL COMPANIES AND IT IS INAPPLICABLE UPON PHARMA COMPANIES LIKE AS SESSEE THEN, WHERE IS THE VIOLATION OF ANY OF LAW/REGULATION? UNDER WHICH PROVISION THERE IS ANY OFFENCE OR VIOLATION IN INCURRING OF SUCH KIND OF EXPENDITURE. THE RELEVANT PROVISION OF SECTION 37(1) READS AS UNDER: (1) ANY EXPENDITURE (NOT BEING EXPENDIT URE OF THE NATURE DESCRIBED IN SECTIONS 30 TO 36 AND NOT BEING IN THE NATURE OF CAPITAL EXPENDITURE OR PERSONAL EXPENSES OF THE ASSESSEE), LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OR PROFESSION SHALL BE ALLOWED IN COMPUT ING THE INCOME CHARGEABLE UNDER THE HEADS PROFITS AND GAINS OF BUSINESS OR PROFESSION EXPLANATION 1 FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT ANY EXPENDITURE INCURRED BY AN ASSESSEE FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITE D BY LAW SHALL NOT BE DEEMED TO HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS OR PROFESSION AND NO DEDUCTION OR ALLOWANCE SHALL BE MADE IN RESPECT OF SUCH EXPENDITURE. THE AFORESAID PROVISION APPLIES TO AN ASSESSEE WHO IS CLAIMING DEDUCTION OF EXPENDITU RE WHILE COMPUTING HIS BUSINESS INCOME. THE EXPLANATION PROVIDES AN EMBARGO UPON ALLOWING ANY EXPENDITURE INCURRED BY THE ASSESSEE FOR ANY PURPOSE 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 BROUGHT ON RECORD, WHICH PROHIBITS THE PHARMACEUTICAL COMPANY NOT TO INCUR ANY DEVELOPMENT OR SALES PROMOTION EXPENSES. A LAW WHICH IS APPLICABLE TO DIFFERENT CLASS OF PERSONS OR PARTICULAR CATEGORY OF ASSESSEE, SAME CANNOT BE MADE APPLICABLE TO ALL. THE REGULATION OF 2002 ISSUED BY THE MEDICAL COUNCIL OF INDIA (SUPRA), PROVIDES LIMITATION/CURB/PR OHIBITION FOR MEDICAL PRACTITIONERS ONLY AND NOT FOR PHARMACEUTICAL COMPANIES. HERE THE MAXIM OF EXPRESSIO UNIUS EST EXCLUSIO ALTERIUS IS CLEARLY APPLICABLE, THAT IS, IF A PARTICULAR EXPRESSION IN THE STATUTE IS EXPRESSLY STATED FOR PARTICULAR CLASS OF A SSESSEE THEN BY IMPLICATION WHAT HAS NOT BEEN STATED OR EXPRESSED IN THE STATUTE HAS TO BE EXCLUDED FOR OTHER CLASS OF ASSESSEE. 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 APPLICABLE TO AN ASSESSEE CLAIMING THE EXPENSE THEN BY IMPLICATION, ANY IMPAIRMENT CAUSED BY EXPLANATION1 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 UPON THE FACT THAT CBDT CIRCULAR, WHILE CLARIFYING THE APPLICABILITY OF EXPLANATION 1 TO SECTION 37(1) ON ME DICAL PRACTITIONERS AND PHARMACEUTICAL COMPANIES HAVE INTERPRETED THAT INDIAN MEDICAL COUNCIL REGULATION IS APPLICABLE FOR PHARMACEUTICAL COMPANIES ALSO. HE ALSO BROUGHT TO OUR NOTICE THAT ANOTHER NOTIFICATION WAS ISSUED BY INDIAN MEDICAL COUNCIL WHICH WAS PUBLISHED ON 01.12.2016 WHICH FURTHER PROHIBITS SUCH KIND OF EMBARGO ON MEDICAL PRACTITIONERS AND HAVE ADDED PARA 6.8.1 AND ALSO GIVEN INSTANCES OF ACTION WHICH SHALL BE TAKEN UPON MEDICAL PRACTITIONERS. THE 10 ITA NO.252 /CTK/2016 ASSESSMENT YEAR : 2012 - 13 RELEVANT CLAUSE OF THE SAID NOTIFICATION AS REL IED UPON BY HIM IS REPRODUCED HEREUNDER: 6.8. CODE OF CONDUCT FOR DOCTORS IN THEIR RELATIONSHIP WITH PHARMACEUTICAL AND ALLIED HEALTH SECTOR INDUSTRY THE SECTION 68.1(B) SHALL BE SUBSTITUTED IN TERMS OF NOTIFICATION PUBLISHED ON 01.02.2016 IN GAZETTE OF I NDIA, 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 O R THEIR 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 VIOLATION OF SECTION 6.8 AS AMENDED VIDE NOTIFICATION DATED 10/ 12/2009, SHALL BE PRESCRIBED BY FURTHER AMENDING THE SECTION 6.8.1 AS UNDER: - SECTION ACTION 6.8.1 IN DEALING WITH PHARMACEUTICAL AND ALLIED HEALTH SECTOR INDUSTRY, A MEDICAL PRACTITIONER SHALL 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. 10,00 0/ - : 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 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 1 YEAR GIFTS MORE THAN RS. 1,00,000/ - : REMOVAL FOR A PERIOD OF MORE THAN (ONE) YEAR FROM INDIAN MEDICAL REGISTER OR STATE MEDICAL REGISTER B) TRAVEL FACILITIES: A MEDICAL P RACTITIONER SHALL NOT ACCEPT ANY TRAVEL FACILITY INSIDE THE COUNTRY OR OUTSIDE, INCLUDING RAIL, ROAD, AIR, SHIP, CRUISE TICKETS, PAID VACATIONS ETC. FROM ANY PHARMACEUTICAL OR ALLIED HEALTHCARE INDUSTRY OR THEIR REPRESENTATIVES FOR SELF AND FAMILY MEMBERS FOR VACATION OR FOR 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/ - : REMOVA L 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/ - : 11 ITA NO.252 /CTK/2016 ASSESSMENT YEAR : 2012 - 13 ATTENDING CONFERENCES, SEMINARS, WORKSHOPS, CME PROGRAMME ETC. AS A DELEGATE. REMOVAL FROM INDIAN MEDICAL REGISTER OR STATE MEDICAL REGISTER FOR 6 (SIX) MONTHS. EXPENSES FOR TRAVEL FACIL ITIES 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 M EDICAL 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 RS21 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 MEDI CAL REGISTER OR STATE MEDICAL REGISTER FOR 6 (SIX) MONTHS. EXPENSES FOR HOSPITALITY 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 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: - A MEDICAL PRACTITIONER SHALL NOT RECEIVE ANY CASH OR MONETARY GRANTS FROM ANY PHARMACEUTICAL AND ALLIED HEALTHCA RE INDUSTRY FOR INDIVIDUAL PURPOSE IN 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 INSTITUTIO NS, IN A TRANSPARENT MANNER. IT SHALL ALWAYS BE FULLY DISCLOSED CASH OR MONETARY GRANTS MORE THAN RS. 1,000/ - UPTO RS. 5,000/ - : CENSURE CASH OR MONETARY GRANTS MORE THAN RS. 5,000/ - UPTO RS. 10,000/ - : REMOVAL FROM INDIAN MEDICAL REGISTER OR STATE MEDICAL REG ISTER FOR 3 (THREE) 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 12 ITA NO.252 /CTK/2016 ASSESSMENT YEAR : 2012 - 13 FROM THE AFORESAID NOTIFICATION, LD. CIT DR SUBMITTED THAT SO MANY VIOLATIONS AND CENSURES HAVE BEEN PRESCRIBED FOR ANY EXPENDITURES/ OR BENEFIT 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 INTERPRET THE LAW AND PROHIBIT ALLOWANCE OF ANY EXPENDITURE WHICH VIOLATES ANY STATUTE OR IS IN NATURE OF OFFENCE. 8. FROM A PERUSAL OF ABOVE AMENDMENT/NOTIFICATION IN THE MCI REGULATI ON, IT IS QUITE CLEAR AGAIN THAT SAME IS APPLICABLE FOR MEDICAL PRACTITIONERS ONLY AND THE CENSURE/ACTION WHICH HAS BEEN SUGGESTED BY IT IS ONLY ON MEDICAL PRACTITIONERS AND NOT FOR PHARMACEUTICAL COMPANIES OR ALLIED HEALTH SECTOR INDUSTRIES. THE VIOLATION OF THE AFORESAID REGULATION WOULD NOT ONLY ENSURE A REMOVAL OF A DOCTOR FROM THE INDIAN MEDICAL REGISTER OR STATE MEDICAL REGISTER FOR A CERTAIN PERIOD OF TIME AND IT DOES NOT IMPINGE UPON THE CONDUCT OF PHARMACEUTICAL COMPANIES. THIS IMPORTANT DISTINCTIO N HAS TO BE KEPT IN MIND THAT REGULATION ISSUED BY MEDICAL COUNCIL OF INDIA IS QUA THE DOCTORS/MEDICAL PRACTITIONERS AND NOT FOR THE PHARMACEUTICAL COMPANIES. AS A LOGICAL COROLLARY TO IT, IF THERE IS ANY VIOLATION OR PROHIBITION AS PER MCI REGULATION IN T ERMS OF SECTION 37(1) R.W.EXPLANATION1, THEN IT IS ONLY MEANT FOR MEDICAL PRACTITIONERS AND NOT FOR PHARMACEUTICAL COMPANY (ASSESSEE COMPANY) FOR CLAIMING THE EXPENDITURE. 9. ADVERTING TO THE CONTENTION OF THE LD. CIT DR THAT CBDT IS WELL EMPOWERED TO ISS UE SUCH CLARIFICATION, IT IS SEEN THAT THE CBDT CIRCULAR DATED 01.08.2012 (SUPRA) IN ITS CLARIFICATION HAS ENLARGED THE SCOPE AND APPLICABILITY OF INDIAN MEDICAL COUNCIL REGULATION 2002 BY MAKING IT APPLICABLE TO THE PHARMACEUTICAL COMPANIES OR ALLIED HE ALTH CARE SECTOR INDUSTRIES. SUCH AN ENLARGEMENT OF SCOPE OF MCI REGULATION TO THE PHARMACEUTICAL COMPANIES BY THE CBDT IS WITHOUT ANY ENABLING PROVISIONS EITHER UNDER THE PROVISIONS OF INCOME TAX LAW OR BY ANY PROVISIONS UNDER THE INDIAN MEDICAL COUNCIL R EGULATIONS. THE CBDT CANNOT PROVIDE CASUS OMISSUS TO A STATUTE OR NOTIFICATION OR ANY REGULATION 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 A ND BY CLARIFYING THE STATUTORY PROVISIONS. CBDT CIRCULARS ACT LIKE EXPOSITIO IN INTERPRETING THE STATUTORY PROVISIONS AND TO ASCERTAIN THE TRUE MEANING ENUNCIATED AT THE TIME WHEN STATUTE WAS ENACTED. HOWEVER THE CBDT IN ITS POWER CANNOT CREATE A NEW IMPAIRMENT ADVERSE TO AN ASSESSEE OR TO A CLASS OF ASSESSEE WITHOUT ANY SANCTION OF LAW. THE CIRCULAR ISSUED BY THE CBDT MUST 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 TH E SCOPE OF A DIFFERENT REGULATION ISSUED UNDER A DIFFERENT ACT SO AS TO IMPOSE ANY KIND OF HARDSHIP OR LIABILITY TO THE ASSESSEE. IN ANY CASE, IT IS TRITE LAW THAT THE CBDT CIRCULAR WHICH CREATES A BURDEN OR LIABILITY OR IMPOSES A NEW KIND OF IMPARITY, SAM E CANNOT BE RECKONED RETROSPECTIVELY. THE BENEFICIAL CIRCULAR MAY APPLY RETROSPECTIVELY BUT A CIRCULAR IMPOSING A BURDEN HAS TO BE APPLIED PROSPECTIVELY ONLY. HERE IN THIS CASE THE CBDT HAS ENLARGED THE SCOPE OF INDIAN MEDICAL COUNCIL REGULATION, 2002 AN D MADE IT APPLICABLE FOR 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 ORDER DATED 23.12.2015), WHEREIN TRIBUNAL HELD THAT CBDT CIRCULAR WOULD NOT NOT BE APPLICABLE IN THE A.YS. 2010 - 11 AND 2011 - 12 AS IT WAS INTRODUCED W.E.F. 1.8.2012. 13 ITA NO.252 /CTK/2016 ASSESSMENT YEAR : 2012 - 13 10. FROM THE PERUSAL OF THE NATURE OF EXPENDITURE INCURRED BY THE ASSESSEE, IT IS SEEN THAT UNDER THE HEAD CUSTOMER RELATIONSHIP MANAGEMENT, THE ASSESSEE ARRANGES NATIONAL LEVEL SEMINAR AND DISCUSSION PANELS OF EMINENT DOCTORS AND INVITING 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 I T. UNDER KEY 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 PLACE IN THE AREA OF MEDICINE AND PROVIDING CORRECT DIAGNOSIS AND TREA TMENT OF THE PATIENTS. THE 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 AND BUSINESS PROMOTION, WHI CH HAS TO BE ALLOWED. COMING TO THE GIFT ARTICLES AND FREE SAMPLES OF MEDICINES, IT IS SEEN THAT THE ASSESSEE GIVES VARIOUS KIND OF ARTICLES LIKE, DIARIES, PEN SETS, CALENDARS, PAPER WEIGHTS, INJECTION BOXES ETC. EMBOSSED WITH BOLD LOGO OF ITS BRAND NAME AND THE PRODUCT NAME SO THAT THE DOCTORS REMEMBERS THE BRAND OF THE ASSESSEE AND ALSO THE NAME 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 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 TO PROVE THE EFFICACY AND TO ESTABLISH THE TRUS T OF THE DOCTORS ON THE QUALITY OF THE DRUGS. THIS AGAIN 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 PRODUCTS, CAN PROM OTE ITS SALE AND BRAND ONLY BY ARRANGING SEMINARS, CONFERENCES AND THEREBY CREATING AWARENESS AMONGST DOCTORS ABOUT THE NEW RESEARCH IN THE MEDICAL FIELD AND THERAPEUTIC AREAS, ETC. EVERY DAY THERE ARE NEW DEVELOPMENTS TAKING PLACE AROUND THE WORLD IN THE AREA 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 LATEST DEVELOPMENTS IN THE MEDICINE AND THE MAIN OBJECT OF SUCH CONFERENC ES 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 AND CONCLUDED BY THE LEARNED CIT(A) THERE IS NO VIOLATION BY TH E 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 BUSINESS EXPENDITURE AND IS NOT IMPAIRED BY EXPLANATI ON 1 TO SECTION 37(1). 11. BEFORE US, THE LD. CIT DR HAS ALSO MUCH HARPED UPON THE DECISION OF THE HONBLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF CONFEDERATION OF INDIAN PHARMACEUTICAL INDUSTRY (SS) VS. CBDT (SUPRA), IN SUPPORT OF THE ARGUMENT THAT CB DT 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 HONBLE HIGH COURT, IT IS SEEN THAT IN THAT CASE THE VALIDITY OF CIRCULAR NO.5/12 DATED 1.8.2012 WAS CHALLENGED. THE HONBLE 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 REGULATION FRAMED BY THE MEDICAL COUNCIL, THEN IT MA Y 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 14 ITA NO.252 /CTK/2016 ASSESSMENT YEAR : 2012 - 13 8 MCI REGULATION IS NOT APPLICABLE TO THE ASSESSEE BEFORE THE AO, THE S AMECANNOT 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 LIMITED ITA NOS. 904 & 945/MUM/2013, DECIDED VIDE ORDER DATED 12.09.2016. IN COUNT ER, TO THIS DECISION THE LEARNED COUNSEL, SHRI JD MISTRY DISTINGUISHED THE SAID JUDGMENT AND SUBMITTED THAT THE FACTS OF THE CASE IN THE LIVA HEALTHCARE (SUPRA) WERE SUBSTANTIALLY DIFFERENT FROM THE FACTS OF THE PRESENT CASE. IN THE CASE OF LIVA HEALTHCARE , THE HONBLE TRIBUNAL DISALLOWED SUCH EXPENSES U/S. 37(1) OF THE ACT ON THE GROUND THAT THEY WERE NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AS THE SAME WERE INCURRED TO CREATE GOOD RELATIONS WITH THE DOCTORS IN LIEU OF EXPECTED FAVOU RS FROM DOCTORS FOR RECOMMENDING TO THE PATIENTS THE PHARMACEUTICAL PRODUCTS DEALT WITH BY THE COMPANY TO GENERATE MORE AND MORE BUSINESS AND PROFITS FOR THE ASSESSEE COMPANY. THE TRIBUNAL ALSO RECORDED THE FACT THAT THE SPOUSE OF THE DOCTORS ALSO ACCOMPAN IED THE DOCTORS FOR OVERSEAS TRIPS TO ISTANBUL AND EXPENSES WERE INCURRED FOR CRUISE TRAVELS TO ISLAND, GALA DINNER, COCKTAILS, GALA ENTERTAINMENT ETC. OF SUCH DOCTORS. IN ASSESSEES CASE IT IS AN ADMITTED FACT THAT EXPENSES HAVE NOT BEEN INCURRED FOR THE PURPOSE PERSONAL 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 BEFORE THE HONBLE BENCH. HE REITERATED THAT THE HONBLE DELHI HIG H COURT IN THE CASE OF MAX HOSPITAL (SUPRA) AND THE JURISDICTIONAL TRIBUNAL IN THE CASE OF SYNCOM (SUPRA) HAVE HELD THAT SUCH IMC REGULATIONS APPLY ONLY TO MEDICAL PRACTITIONERS. HE FURTHER SUBMITTED THAT THE TRIBUNAL IN THE CASE OF ACIT VS. LIVA HEALTHCAR E 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, HONBLE TRIBUNAL WHILE NOTING THE FACT THAT CONSISTENCY HAS TO BE ADOPTED, DISTINGUISHED THE ORDER OF A.Y. 2008 - 09 AS UNDER: THE A SSESSEE 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 T O INCOME TAX PROCEEDINGS ALTHOUGH WE ARE FULLY AGREEABLE THAT PRINCIPLES OF CONSISTENCY IS TO BE MAINTAINED (HONBLE SUPREME COURT DECISION IN RADHA SOAMI SATSANG V. CIT (1992) 193 ITR 321 (SC) BUT IN THE INSTANT ASSESSMENT YEAR, WE HAVE OBSERVED THAT THES E OVERSEAS TRIPS FOR DOCTORS AND THEIR SPOUSES WERE ORGANIZED BY THE ASSESSEE WHEREBY NO DETAILS 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 OVERS EAS TRIP WHICH INCLUDED CRUISE VISIT TO ISLAND, GALA DINNERS, COCKTAIL, GALA ENTERTAINMENT ETC. RATHER THAN BEING DIRECTED TOWARDS SEMINAR FOR PRODUCT INFORMATION DISSEMINATION OR DIRECTED TOWARDS KNOWLEDGE ENHANCEMENT OR KNOWLEDGE SHARING ORIENTED AS NO D ETAILS OF SEMINAR AND ITS COURSE 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 FEATURE IN THIS YEAR ENABLING US TO TAKE A DI VERGENT VIEW AND THE EXPENSES INCURRED BY THE ASSESSEE CANNOT BE ALLOWED AS BUSINESS EXPENDITURE U/S. 37 OF THE ACT AS IT IS CLEARLY HIT BY EXPLANATION TO SECTION 37 OF THE ACT BEING AGAINST PUBLIC POLICY AS UNETHICAL PROHIBITED BY LAW. IN VIEW OF THE ABO VE, HE POINTED OUT THAT IN THE ABOVE 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 DOCTORS AND THAT THE TRIPS WERE DIRECTE D TOWARDS LEISURE AND ENTERTAINMENT OF DOCTORS AND THEIR SPOUSES. THIS WAS A DISTINGUISHABLE FEATURE FOR THE HONBLE 15 ITA NO.252 /CTK/2016 ASSESSMENT YEAR : 2012 - 13 TRIBUNAL TO TAKE A CONTRARY VIEW FROM A.Y. 2008 - 09. HE FURTHER SUBMITTED THAT THE HONBLE TRIBUNAL IN THE CASE OF LIVA HEALTHCARE LTD. VS. ACIT (ITA NO. 4791/MUM/2014) FOR A.Y. 2010 - 11 HAS FOLLOWED THE DECISION OF LIVA HEALTHCARE (SUPRA) FOR A.Y. 2008 - 09 AND HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. THIS, FURTHER BRINGS OUT THE FACT THAT THE HONBLE 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 INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. 13. APART FROM THE AFORESAID DISTINGUISHING FEATURES AS HIGHLIGHTED BY THE LEARNED SE NIOR COUNSEL, WE FIND THAT ON THE FACTS ITSELF IN THE CASE OF LIVA HEALTHCARE (2009 - 2010) (SUPRA), THERE WAS A CLEAR CUT MATERIAL ON RECORD THAT THE DOCTORS ALONG WITH THEIR SPOUSES WERE TAKEN TO FOREIGN TOURS AND CRUISE TRAVEL ETC., IN LIEU OF EXPECTED FA VOURS FROM DOCTORS. IN THE LIGHT OF THESE FACTS AND MATERIAL THE TRIBUNAL HAS DECIDED THE ISSUE AGAINST THE ASSESSEE BY NOT FOLLOWING THE EARLIER YEAR PRECEDENCE AND SUBSEQUENT YEAR ORDERS OF THE SAME ASSESSEE. AS BROUGHT ON RECORD BEFORE US, WE FIND THAT SIMILAR ISSUE OF ALLOWANCE OF SUCH EXPENDITURE IN THE CASE OF PHARMACEUTICAL COMPANIES HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE, IN THE CASE OF UCB INDIA PVT. LTD. V. ITO (ITA NO. 6681/MUM/2013 ORDER DATED 13.05.2016, WHEREIN IT WAS HELD THAT CBDT CIRCUL AR CANNOT HAVE A RETROSPECTIVE EFFECT. THIS JUDGMENT WAS LOST SIGHT OF BY THE BENCH. IN ANY CASE ON CAREFUL PERUSAL OF THE TRIBUNAL ORDER IN THE CASE OF LIVA HEALTHCARE (SUPRA) WE FIND THAT THE TRIBUNAL THOUGH HAS INCORPORATED THE RELEVANT PROVISIONS AND C LAUSES OF THE INDIAN MEDICAL COUNCIL REGULATION 2002, HOWEVER, 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 B E SOME ENABLING PROVISION OR SPECIFIC CLAUSE IN THE SAID REGULATION WHEREBY THE PHARMACEUTICAL COMPANIES ARE BARRED FROM CONDUCTING SEMINARS OR CONFERENCES BY SPONSORING THE 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 LAW WHEREBY PHARMACEUTICAL COMPANIES ARE PROHIBITED TO CONDUC T CONFERENCES OR SEMINAR OR GIVE FREE SAMPLES. IN THE TRIBUNAL DECISION OF LIVA HEALTHCARE, STRONG REFERENCE HAS BEEN MADE TO HONBLE HIMACHAL PRADESH HIGH COURT (SUPRA), THAT THE SAID CBDT CIRCULAR HAS BEEN UPHELD. ON THIS ASPECT WE HAVE ALREADY DISCUSSED IN DETAIL HEREIN ABOVE THAT, FIRSTLY, HIGH COURT ITSELF CARVES OUT A RIDER THAT ASSESSEE IS FREE TO DEMONSTRATE BEFORE THE AO THAT THIS CIRCULAR IS NOT APPLICABLE ON FACTS OF THE CASE; AND SECONDLY, CBDT CIRCULAR WHICH CREATES NEW IMPAIRMENT AND IMPOSES D ISALLOWBILITY 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 HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. 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 HONBLE HIGH COURT HELD THAT SAID PAYMENT OF COMMISSION I S 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 NO VIOLATION OF ANY LAW OR ANYTHING WHICH IS OPPOSED TO PUBL IC POLICY. SIMILARLY, THERE IS REFERENCE TO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ESKAYEF (NOW KNOWN AS SMITHKLINE BEECHAM) PHARMACEUTICALS (INDIA) LIMITED V. CIT (2000) 111 TAXMAN 561(SC), WHICH WAS GIVEN IN CONTEXT OF SECTION 37(3A) OF THE ACT. IN THE SAID CASE THE ASSESSEE HAD CLAIMED EXPENDITURE ON DISTRIBUTION OF PHYSICIANS SAMPLES U/S. 37. IN THE BACKGROUND OF SUCH CLAIM THE HONBLE APEX COURT HELD THAT, IF THE EXPENDITURE FALLS WITHIN THE BARE MINIMUM IT WILL NOT BE CAUGHT BY SUBSECTI ON (3A) OF SECTION 37. ON THE 16 ITA NO.252 /CTK/2016 ASSESSMENT YEAR : 2012 - 13 CONTRARY, THE HONBLE APEX COURT OBSERVED THAT PHYSICIANS SAMPLES 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 SUC H CASES GIVING A PHYSICIAN SAMPLES FOR REASONABLE PERIOD IS ESSENTIAL TO THE BUSINESS OF MANUFACTURE AND SALE OF 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 DEVELOPMENT 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 TO A HONBLE APEX COURT D ECISION 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 APPLICABLE AND ALSO WE HAVE ALREADY GIVEN OUR INDEPENDENT FINDING AS TO ALLOWABILITY OF EXPENSES IN THE HANDS OF THE ASSESSEE AS BUSINESS EXPENDITURE. 14. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD. CIT(A) DELETING DISALLOWANCE AGGREGATING TO RS.22,99,72,607/. 9. LD D.R. COULD NOT SHOW ANY GOOD REASON TO NOT TO FOLLOW THE ABOVE QUOTED DECISION OF THE TRIBUNAL. THEREFORE, R ESPECTFULLY FOLLOWING THE ABOVE QUOTED DECISION OF THE MUMBAI B ENCHES OF THE TRIBUNAL IN THE CASE OF PHL PHARMA P LTD (SUPRA), WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND VACATE THE DISALLOWANCE OF RS.1,02,29,795/ - AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRO NOUNCED IN THE OPEN COURT ON 28 /04/2017 . SD/ - SD/ - (KULDIP SINGH) ( N.S SAINI) JUDICIAL MEMBER A CCOUNTANT MEMBER CUTTACK; DATED 28 /04/2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : 17 ITA NO.252 /CTK/2016 ASSESSMENT YEAR : 2012 - 13 BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : M/S SEAMARK BIO ORGANIC PVT LTD., AT: MARUTIVILLA, PATIA, PLOT NO.12/D, BHUBANESWAR 2. THE RESPONDENT. ACIT, CIRCLE 1(1), CUTTACK 3. THE CIT(A) CUTTACK 4. PR.CIT , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//