MEAD JOHNSON NUTRITION (INDIA) PRIVATE LIMITED, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-7(2)(1), MUMBAI

ITA 2751/MUM/2022

AI Insights

The case involves Mead Johnson Nutrition (India) Pvt. Ltd., which appealed against the order of the Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, Delhi. The appeal contested the disallowance of certain expenses and the findings that the company violated various laws related to the marketing of infant and child nutrition products. The ITAT examined whether the CIT(A) had jurisdiction to make findings under laws not directly related to the Income Tax Act, such as the IMC Regulations and the IMS Act. The tribunal upheld the disallowance of expenses but questioned the CIT(A)'s jurisdiction over the additional findings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123344 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Next Hearing Date: 10-01-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 26-10-2022
• Other Referred Cases: Apex Laboratories (P.) Ltd. v. DCIT, Peerless Hospitex Hospital and Research Center Ltd. v. DCIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Opportunity of being heard; Principle of natural justice; Set aside
• Section: 10; 143(3); 37(1); 250; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “D” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA No. 2751/MUM/2022 Assessment Year: 2012-13 Mead Johnson Nutrition (India) Pvt. Ltd., Unit No. 54, 5 th floor, Kalpataru Square, Andheri Kurla Road, Andheri (East), Mumbai-400059. Vs. ACIT, Circle-7(2)(1), Aayakar Bhavan, Room No. 573, 5 th floor, M.K. Road, Mumbai-400020. PAN No. AAFCM 8167 J Appellant Respondent Assessee by : Shri Bhaumik Goda Revenue by : Smt. Mahita Nair, CIT-DR Date of Hearing : 11/01/2023 Date of pronouncement : 13/02/2023 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 30.08.2022 passed by the Ld. Commissioner of Income-tax (Appeals)-National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2012-13, raising following grounds: 1. That, the Impugned Order dated 30.08.2022 under Section 250 of the Income Tax Act ("IT Act") passed by the Commissioner of Income National Faceless Appeal Centre (in short "Ld. CIT(A)), is illegal, arbitrary, based on extraneous consideration, without jurisdictio principles of natural justice, contrary to well principles of law, based on unsubstantiated presumptions and erroneous interpretation of provisions of law. Thus, the Impugned Order is likely to be set aside by this Hon'ble Tribunal; 2. That, the Ld. CIT (A) while passing the Impugned Order has assumed jurisdiction, outside the scope of its jurisdiction under the IT Act and has rendered a 'conclusive and a sweeping finding that the Appellant Company is in violation of "all related laws" and child nutrition food traded by the Appellant, including the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 (IC Regulations') and the Infant Milk Substitutes, Feeding Bot Production, Supply and Distribution) Act (in short 'IMS Act'): 3. That, the Ld. CIT (A) ought to have exercised jurisdiction and confined the scope of its enquiry limited to its powers conferred upon it under the IT Act. In the present case, the Ld. CIT (A) has illegally assumed jurisdiction under the IMC Regulations and IMS Act and has illegally rendered erroneous finding that the Appellant company is in violation of "all related laws" including the IMC Regulations and IMS Act, which are ex uncalled for; 4. That, the Ld. CIT (A) ought to have confined its enquiry and findings limited only to as to whether the order dated 15.03.2016 passed by the Ld. Assistant Commissioner of Income Tax under Section 143 (3) of the IT Act disallowing certain costs and expenses incurred by the Appellant Company is correct or not as per the provisions of the IT Act. However, the Ld. CIT (A), while passing of the Impugned Order, has rendered 'conclusive finding Mead Johnson (India) Pvt. Ltd., by the Commissioner of Income-tax (Appeals) National Faceless Appeal Centre (in short "Ld. CIT(A)), is illegal, arbitrary, based on extraneous consideration, without jurisdiction, violative of principles of natural justice, contrary to well principles of law, based on unsubstantiated presumptions and erroneous interpretation of provisions of law. Thus, the Impugned Order is likely to be set aside by this Hon'ble Tribunal; That, the Ld. CIT (A) while passing the Impugned Order has assumed jurisdiction, outside the scope of its jurisdiction under the IT Act and has rendered a 'conclusive and a sweeping finding that the Appellant Company is in violation of "all related laws" pertaining to sales and marketing of infant and child nutrition food traded by the Appellant, including the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 (IC Regulations') and the Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act (in short 'IMS Act'): That, the Ld. CIT (A) ought to have exercised jurisdiction and confined the scope of its enquiry limited to its powers conferred upon it under the IT n the present case, the Ld. CIT (A) has illegally assumed jurisdiction under the IMC Regulations and IMS Act and has illegally rendered erroneous finding that the Appellant company is in violation of "all related laws" including the IMC Regulations and IMS Act, which are ex-facie without jurisdiction and uncalled for; That, the Ld. CIT (A) ought to have confined its enquiry and findings limited only to as to whether the order dated 15.03.2016 passed by the Ld. Assistant Commissioner of Income Tax under ion 143 (3) of the IT Act disallowing certain costs and expenses incurred by the Appellant Company is correct or not as per the provisions of the IT Act. However, the Ld. CIT (A), while passing of the Impugned Order, has rendered 'conclusive finding Mead Johnson (India) Pvt. Ltd., ITA No. 2751/M/2022 2 AY 2012-13 tax (Appeals) National Faceless Appeal Centre (in short "Ld. CIT(A)), is illegal, arbitrary, based on extraneous n, violative of principles of natural justice, contrary to well-settled principles of law, based on unsubstantiated presumptions and erroneous interpretation of provisions of law. Thus, the Impugned Order is likely to be set aside by this Hon'ble Tribunal; That, the Ld. CIT (A) while passing the Impugned Order has assumed jurisdiction, outside the scope of its jurisdiction under the IT Act and has rendered a 'conclusive and a sweeping finding that the Appellant Company is in violation of "all related pertaining to sales and marketing of infant and child nutrition food traded by the Appellant, including the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 (IC Regulations') and the Infant Milk Substitutes, tles and Infant Foods (Regulation of Production, Supply and Distribution) Act (in short That, the Ld. CIT (A) ought to have exercised jurisdiction and confined the scope of its enquiry limited to its powers conferred upon it under the IT n the present case, the Ld. CIT (A) has illegally assumed jurisdiction under the IMC Regulations and IMS Act and has illegally rendered erroneous finding that the Appellant company is in violation of "all related laws" including the IMC Regulations and IMS facie without jurisdiction and That, the Ld. CIT (A) ought to have confined its enquiry and findings limited only to as to whether the order dated 15.03.2016 passed by the Ld. Assistant Commissioner of Income Tax under ion 143 (3) of the IT Act disallowing certain costs and expenses incurred by the Appellant Company is correct or not as per the provisions of the IT Act. However, the Ld. CIT (A), while passing of the Impugned Order, has rendered 'conclusive finding on an IMC | Regulations and IMS Act, which are beyond its powers and without jurisdiction; 5. That, it is well settled that a statutory authority, performing administrative or quasi must exercise its j of the statute and any action taken which is not within the domain of the said authority would be illegal and without jurisdiction; 6. That, the Ld. CIT (A) being an authority established under the IT Act, ought to have con the four corners of the IT Act and ought not to have acted in excess of its authority vested by law. In the present case, the Ld CIT' (A) has clearly transgressed the boundary of its jurisdiction and rendered findings which are beyond i and thus, the Impugned Order is illegal and bad in law; 7. That, the Ld. CIT (A) is not an authority designated enquire, consider or 'conclusively' render a finding as to whether or not the Appellant company has violated the provisions of the Act or any other related law; 8. That, the Appellant company was never issued any notice/ show cause notice either by the Ld. Assistant Commissioner of Income Tax or by the Ld. CIT (A) to state its response in relation to the violations or any other law pertaining to sale and marketing of infant and child nutrition food traded by the Appellant company. In fact, the Appellant company could not have been put to notice to answer the said violations Ld. CIT (A) under the IT Act. Despite the said fact, the Ld. CIT (A) has rendered findings which are not only beyond the scope of its jurisdiction but violative of the principles of natural justice as the Appell company was never given any opportunity to answer the alleged violations under the IMC Regulations or IMS Act or any other related law: Mead Johnson (India) Pvt. Ltd., on an erroneous interpretation of provisions of the IMC | Regulations and IMS Act, which are beyond its powers and without jurisdiction; That, it is well settled that a statutory authority, performing administrative or quasi-judicial duty(s), must exercise its jurisdiction within the four corners of the statute and any action taken which is not within the domain of the said authority would be illegal and without jurisdiction; That, the Ld. CIT (A) being an authority established under the IT Act, ought to have confined itself within the four corners of the IT Act and ought not to have acted in excess of its authority vested by law. In the present case, the Ld CIT' (A) has clearly transgressed the boundary of its jurisdiction and rendered findings which are beyond its jurisdiction and thus, the Impugned Order is illegal and bad in That, the Ld. CIT (A) is not an authority designated enquire, consider or 'conclusively' render a finding as to whether or not the Appellant company has violated the provisions of the IMC Regulations or IMS Act or any other related law; That, the Appellant company was never issued any notice/ show cause notice either by the Ld. Assistant Commissioner of Income Tax or by the Ld. CIT (A) to state its response in relation to the violations, if any, of the IMC Regulations or IMS Act or any other law pertaining to sale and marketing of infant and child nutrition food traded by the Appellant company. In fact, the Appellant company could not have been put to notice to answer the said violations, even if any, in the proceedings before the Ld. CIT (A) under the IT Act. Despite the said fact, the Ld. CIT (A) has rendered findings which are not only beyond the scope of its jurisdiction but violative of the principles of natural justice as the Appell company was never given any opportunity to answer the alleged violations under the IMC Regulations or IMS Act or any other related law: Mead Johnson (India) Pvt. Ltd., ITA No. 2751/M/2022 3 AY 2012-13 erroneous interpretation of provisions of the IMC | Regulations and IMS Act, which are beyond That, it is well settled that a statutory authority, judicial duty(s), urisdiction within the four corners of the statute and any action taken which is not within the domain of the said authority would be That, the Ld. CIT (A) being an authority established fined itself within the four corners of the IT Act and ought not to have acted in excess of its authority vested by law. In the present case, the Ld CIT' (A) has clearly transgressed the boundary of its jurisdiction and ts jurisdiction and thus, the Impugned Order is illegal and bad in That, the Ld. CIT (A) is not an authority designated enquire, consider or 'conclusively' render a finding as to whether or not the Appellant company has IMC Regulations or IMS That, the Appellant company was never issued any notice/ show cause notice either by the Ld. Assistant Commissioner of Income Tax or by the Ld. CIT (A) to state its response in relation to the , if any, of the IMC Regulations or IMS Act or any other law pertaining to sale and marketing of infant and child nutrition food traded by the Appellant company. In fact, the Appellant company could not have been put to notice to answer the said , even if any, in the proceedings before the Ld. CIT (A) under the IT Act. Despite the said fact, the Ld. CIT (A) has rendered findings which are not only beyond the scope of its jurisdiction but violative of the principles of natural justice as the Appellant company was never given any opportunity to answer the alleged violations under the IMC Regulations or IMS Act or any other related law: 9. That, it is well of a quasi principles of natural justice is an order without jurisdiction and a nullity; 10. Appellant company had violated all related laws pertaining to sales and marketing of infant and child nutrition food traded by it includin Regulations and IMS Act is erroneous, based on wrongful interpretation of the provisions of the IMC Regulations and IMS Act by the Ld. CIT (A) in its own subject wisdom; 2. Briefly stated, facts of the case are that the assesseecompany is engaged in the business of trading of food’. For the year under consideration, the income on 30.11.2012 declaring total income of Rs.3,67,59,810/ under section 139(1) The return of income filed by the assessee was selected for scrutiny and statutory notices under the Act were issued and complied with. In the scrutiny assessment completed u/s 143(3) of the Act Assessing Officer made disallowance samples amounting to Rs.1,66,083/ conference & seminar expenses of Rs.44,66,926/ appeal, the Ld. CIT(A) also upheld the disallowance vide impugned order. 3. Aggrieved, the assessee is before the Tribunal by way of raising grounds as reproduced above. Mead Johnson (India) Pvt. Ltd., That, it is well-settled position in law that an order of a quasi-judicial authority given in violation of the iples of natural justice is an order without jurisdiction and a nullity; That the finding of the Ld. CIT (A) that the Appellant company had violated all related laws pertaining to sales and marketing of infant and child nutrition food traded by it including the IMC Regulations and IMS Act is erroneous, based on wrongful interpretation of the provisions of the IMC Regulations and IMS Act by the Ld. CIT (A) in its own subject wisdom; Briefly stated, facts of the case are that the assesseecompany in the business of trading of ‘infant& ‘children nutrition . For the year under consideration, the assessee income on 30.11.2012 declaring total income of Rs.3,67,59,810/ of the Income-tax Act, 1961 (in short ‘the Act’). The return of income filed by the assessee was selected for scrutiny and statutory notices under the Act were issued and complied with. In the scrutiny assessment completed u/s 143(3) of the Act sing Officer made disallowance of expenses on account of free samples amounting to Rs.1,66,083/- and disallowance of conference & seminar expenses of Rs.44,66,926/ appeal, the Ld. CIT(A) also upheld the disallowance vide impugned grieved, the assessee is before the Tribunal by way of raising grounds as reproduced above. Mead Johnson (India) Pvt. Ltd., ITA No. 2751/M/2022 4 AY 2012-13 settled position in law that an order judicial authority given in violation of the iples of natural justice is an order without That the finding of the Ld. CIT (A) that the Appellant company had violated all related laws pertaining to sales and marketing of infant and child g the IMC Regulations and IMS Act is erroneous, based on wrongful interpretation of the provisions of the IMC Regulations and IMS Act by the Ld. CIT (A) in its Briefly stated, facts of the case are that the assesseecompany children nutrition assessee filed return of income on 30.11.2012 declaring total income of Rs.3,67,59,810/- tax Act, 1961 (in short ‘the Act’). The return of income filed by the assessee was selected for scrutiny and statutory notices under the Act were issued and complied with. In the scrutiny assessment completed u/s 143(3) of the Act, the expenses on account of free and disallowance of conference & seminar expenses of Rs.44,66,926/-. On further appeal, the Ld. CIT(A) also upheld the disallowance vide impugned grieved, the assessee is before the Tribunal by way of raising 4. Before us, the Ld. Counsel of the assessee has filed a Paperbook containing paged 1 to 144 Substitutes, Feeding Bottles and Infant Foods (R Production, Supply and Distribution) Act, 199 Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002. In the ground raised, the assessee is aggrieved with both the additions sustained by the Ld. CIT(A) with the observation of the Ld. CIT(A) in para 9 of the impugned order. Most of the grounds observation without providing 5. We have heard rival submission of the par dispute and perused the relevant material on record. As far as the first issue of disallowance of free samples is concerned, the Ld. CIT(A) observed that due to failure on the part of the assessee providing list of the name and addr samples/products before the disallowance for 50% of the total expenses which was worked out to Rs.1,60,083/-. The Ld. CIT(A) has observed that such list of name and address was not provided before him disallowance observing as under: “6.2. The appellant in its reply dated 08.01.20 has argued that distribution of such free samples is a part of regular practice. The appellant also relied on the case of PHL (Pharma) (P) Ltd., 146 Mead Johnson (India) Pvt. Ltd., Before us, the Ld. Counsel of the assessee has filed a Paperbook containing paged 1 to 144 interalia Substitutes, Feeding Bottles and Infant Foods (R Production, Supply and Distribution) Act, 1992, Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002. In the ground raised, the assessee is aggrieved with both the additions sustained by the Ld. CIT(A). The assessee is also agitated the observation of the Ld. CIT(A) in para 9 of the impugned of the grounds raised are in respect of making those providing any opportunity to explain. We have heard rival submission of the parties on the issue dispute and perused the relevant material on record. As far as the first issue of disallowance of free samples is concerned, the Ld. CIT(A) observed that due to failure on the part of the assessee providing list of the name and address of the recipient of oducts before the Assessing Officer disallowance for 50% of the total expenses which was worked out to . The Ld. CIT(A) has observed that such list of name and address was not provided before him also therefore, he upheld disallowance observing as under: 6.2. The appellant in its reply dated 08.01.20 has argued that distribution of such free samples is a part of regular practice. The appellant also relied on the case of PHL (Pharma) (P) Ltd., 146 DTR 0149 (Mum). Mead Johnson (India) Pvt. Ltd., ITA No. 2751/M/2022 5 AY 2012-13 Before us, the Ld. Counsel of the assessee has filed a interaliaInfant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of , Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002. In the ground raised, the assessee is aggrieved with both the essee is also agitated the observation of the Ld. CIT(A) in para 9 of the impugned are in respect of making those any opportunity to explain. ties on the issue-in- dispute and perused the relevant material on record. As far as the first issue of disallowance of free samples is concerned, the Ld. CIT(A) observed that due to failure on the part of the assessee in ess of the recipient of free Assessing Officer, he made disallowance for 50% of the total expenses which was worked out to . The Ld. CIT(A) has observed that such list of name also therefore, he upheld 6.2. The appellant in its reply dated 08.01.20 has argued that distribution of such free samples is a part of regular practice. The appellant also relied on the case of PHL 6.3.While considering the argument of the appellant it is imperative tonote its failure to supply relevant names & addresses for verification by the AO. Even while admitting such requisition from the AO in its reply under consideration, no particulars of the recipients of the impugned free samples. It is needless to add that the appellant would not be distributing such free samples to all and sundry. If free samples were actually distributed, those must given to the appellant's traders, dealers, distributor etc. having definite names and addresses. Failure to provide even relevant names either before AO or at this stage poses serious doubts regarding veracity of the claim. Evidently, the appell verification in this regard. 6.4.Therefore, in the case of the appellant authenticity or genuineness ofthe claim was put in question by the AO. In conclusion, what remained unproven or dubious is reliability of expenses way, in absence of any verifiable data regarding expenditure incurred on distribution of free samples, estimated addition made by the AO appears to be justified. This ground of appeal is thus, decided against the appellant. 6.5.Before departing from this issue, it is pertinent to refer that referenceto the case of PHL (Pharma) (P) Ltd. will not come to the rescue of the appellant, as this decision no longer holds good after the decisions in the cases of Apex Laboratories (P.) Ltd., [2022] 135 taxmann.com 286 (SC) and Peerless Hospitex Hospital and Research Center Ltd., [2022] 137 taxmann.com 359 (Calcutta). discussed herein below. Therefore, on both counts addition made by the AO is upheld.” 5.1 Before us, also no such l been provided by the assessee. the Infant Milk Substitutes, Feeding Bottles and Infant Foods Mead Johnson (India) Pvt. Ltd., 6.3.While considering the argument of the appellant it is imperative tonote its failure to supply relevant names & addresses for verification by the AO. Even while admitting such requisition from the AO in its reply under consideration, no attempt was made to provide slightest particulars of the recipients of the impugned free samples. It is needless to add that the appellant would not be distributing such free samples to all and sundry. If free samples were actually distributed, those must have been given to the appellant's traders, dealers, distributor etc. having definite names and addresses. Failure to provide even relevant names either before AO or at this stage poses serious doubts regarding veracity of the claim. Evidently, the appellant is consciously trying to escape verification in this regard. 6.4.Therefore, in the case of the appellant authenticity or genuineness ofthe claim was put in question by the AO. In conclusion, what remained unproven or dubious is reliability of expenses incurred, not its legitimacy. In this way, in absence of any verifiable data regarding expenditure incurred on distribution of free samples, estimated addition made by the AO appears to be justified. This ground of appeal is thus, decided against lant. 6.5.Before departing from this issue, it is pertinent to refer that referenceto the case of PHL (Pharma) (P) Ltd. will not come to the rescue of the appellant, as this decision no longer holds good after the decisions in the cases of Apex s (P.) Ltd., [2022] 135 taxmann.com 286 (SC) and Peerless Hospitex Hospital and Research Center Ltd., [2022] 137 taxmann.com 359 (Calcutta). discussed herein below. Therefore, on both counts addition made by the AO Before us, also no such list of recipients of free samples has been provided by the assessee. Further, on perusal of section 4 of the Infant Milk Substitutes, Feeding Bottles and Infant Foods Mead Johnson (India) Pvt. Ltd., ITA No. 2751/M/2022 6 AY 2012-13 6.3.While considering the argument of the appellant it is imperative tonote its failure to supply relevant names & addresses for verification by the AO. Even while admitting such requisition from the AO in its reply under attempt was made to provide slightest particulars of the recipients of the impugned free samples. It is needless to add that the appellant would not be distributing such free samples to all and sundry. If free have been given to the appellant's traders, dealers, distributor etc. having definite names and addresses. Failure to provide even relevant names either before AO or at this stage poses serious doubts regarding veracity of the claim. ant is consciously trying to escape 6.4.Therefore, in the case of the appellant authenticity or genuineness ofthe claim was put in question by the AO. In conclusion, what remained unproven or dubious is incurred, not its legitimacy. In this way, in absence of any verifiable data regarding expenditure incurred on distribution of free samples, estimated addition made by the AO appears to be justified. This ground of appeal is thus, decided against 6.5.Before departing from this issue, it is pertinent to refer that referenceto the case of PHL (Pharma) (P) Ltd. will not come to the rescue of the appellant, as this decision no longer holds good after the decisions in the cases of Apex s (P.) Ltd., [2022] 135 taxmann.com 286 (SC) and Peerless Hospitex Hospital and Research Center Ltd., [2022] 137 taxmann.com 359 (Calcutta). discussed herein below. Therefore, on both counts addition made by the AO of free samples has n perusal of section 4 of the Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992, we find that distribution Bottles and Infant Foods has been prohibited under the Act. For ready reference, the relevant section is reproduced as under: “Section 4 – of infant milk substitut No person shall a. Supply or substitutes or [feeding bottles or infant foods] or gifts of utensils or other articles; or b. Contact any pregnant woman or the mother of an infant ; or c. Offer inducement of for the purpose of promoting the use or sale of infant milk substitutes or [feedings 5.2 In view of above, the contention of the assessee that this expenditure was for the purpose of its business the distributing of free samples prohibited. In view of provisions of reproduce above, we do not find any error in the order of the Ld. CIT(A) in upholding the disallowance made by the Assessing Officer following the ratio in the case of M/s Apex Laboratories Pvt. Ltd. v. DCIT (supra) 5.3 The next issue is in respect of disallowance of expenses of Rs.42,66,926/- on account of org for the doctors and healthcare professionals. The contention of th assessee that said expenses have Mead Johnson (India) Pvt. Ltd., (Regulation of Production, Supply and Distribution) Act, 1992, we find that distribution of samples of Infant Milk Substitutes, Feeding Bottles and Infant Foods has been prohibited under the Act. For ready reference, the relevant section is reproduced as under: Prohibition of incentives for the use or sale of infant milk substitutes or feeding bottles No person shall— Supply or distribute samples of infant milk substitutes or [feeding bottles or infant foods] or gifts of utensils or other articles; or Contact any pregnant woman or the mother of an infant ; or Offer inducement of any other kind, or the purpose of promoting the use or sale of infant milk substitutes or [feedings bottles or infant foods].” In view of above, the contention of the assessee that this expenditure was for the purpose of its business, is not accepted the distributing of free samples to healthcare personnel is prohibited. In view of provisions of reproduce above, we do not find any error in the order of the Ld. CIT(A) in upholding the disallowance made by the Assessing Officer following the ratio in M/s Apex Laboratories Pvt. Ltd. v. DCIT (supra) The next issue is in respect of disallowance of expenses of on account of organizing conference octors and healthcare professionals. The contention of th assessee that said expenses have been incurred for conference and Mead Johnson (India) Pvt. Ltd., ITA No. 2751/M/2022 7 AY 2012-13 (Regulation of Production, Supply and Distribution) Act, 1992, we of samples of Infant Milk Substitutes, Feeding Bottles and Infant Foods has been prohibited under the Act. For ready reference, the relevant section is reproduced as under: Prohibition of incentives for the use or sale samples of infant milk substitutes or [feeding bottles or infant foods] or gifts of Contact any pregnant woman or the mother of an or the purpose of promoting the use or sale of infant milk In view of above, the contention of the assessee that this is not accepted as to healthcare personnel is prohibited. In view of provisions of reproduce above, we do not find any error in the order of the Ld. CIT(A) in upholding the disallowance made by the Assessing Officer following the ratio in M/s Apex Laboratories Pvt. Ltd. v. DCIT (supra). The next issue is in respect of disallowance of expenses of anizing conference and seminars octors and healthcare professionals. The contention of the incurred for conference and seminar, travel facility of the healthcare professionals assessee has justified the business expediency of the expenses by submitting that the expenses enable the healthcare profe gather technical knowledge and commercial insights about the products. The assessee submitted that conference/seminars products in the field of infant and child nutrition products. The Ld. CIT(A) however, rejected the contention of the assessee that assessee is not covered under the allied healthcare services and Regulation of Indian Medical Council (Profession Etiquette and Ethics) Regulations, 2002 are not applicable on the assessee. The Ld. CIT(A) extensively discussed Indian Medical Council (supra) and the decision of the Hon’ble Apex Court (supra) and decision of the Hon’ble Cal the case of in Peerless Hospitex Hospital and Research Center Ltd. [2002] 137 taxmann.com 359 (Calcutta) found the activity of the assessee in violation of provisions of Infant Foods (Regulation of Production, Suppl 1992. The relevant observation “8. As the appellant company has argued that being a trader of infant and child nutrition products it is not covered under "allied healthcare", let me briefly discuss the Inf Milk Substitutes, Feeding Bottles, and Infant Foods (IMS) Act. In 1992, India adopted the Infant Milk Substitutes, Feeding Bottles, and InfantFoods (IMS) Act. It was further amended in 2003 to strengthen certain provisions and close Mead Johnson (India) Pvt. Ltd., travel facility of the healthcare professionals assessee has justified the business expediency of the expenses by submitting that the expenses enable the healthcare profe gather technical knowledge and commercial insights about the products. The assessee submitted that conference/seminars expenses indirectly enhance sale of products in the field of infant and child nutrition products. The Ld. CIT(A) however, rejected the contention of the assessee that assessee is not covered under the allied healthcare services and Regulation of Indian Medical Council (Profession Etiquette and Ethics) Regulations, 2002 are not applicable on the d. CIT(A) extensively discussed the provisions of Indian Medical Council (supra) and the decision of the Hon’ble Apex Court (supra) and decision of the Hon’ble Calcutta High Court in Peerless Hospitex Hospital and Research Center Ltd. [2002] 137 taxmann.com 359 (Calcutta). The Ld. CIT(A) also found the activity of the assessee in violation of provisions of Infant Foods (Regulation of Production, Supply and Distribution) Act, The relevant observations are reproduced as under: 8. As the appellant company has argued that being a trader of infant and child nutrition products it is not covered under "allied healthcare", let me briefly discuss the Inf Milk Substitutes, Feeding Bottles, and Infant Foods (IMS) Act. In 1992, India adopted the Infant Milk Substitutes, Feeding Bottles, and InfantFoods (IMS) Act. It was further amended in 2003 to strengthen certain provisions and close Mead Johnson (India) Pvt. Ltd., ITA No. 2751/M/2022 8 AY 2012-13 travel facility of the healthcare professionals etc. The assessee has justified the business expediency of the expenses by submitting that the expenses enable the healthcare professional to gather technical knowledge and commercial insights about the products. The assessee submitted that incurring enhance sale of healthcare products in the field of infant and child nutrition products. The Ld. CIT(A) however, rejected the contention of the assessee that assessee is not covered under the allied healthcare services and Regulation of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 are not applicable on the the provisions of Indian Medical Council (supra) and the decision of the Hon’ble Apex cutta High Court in Peerless Hospitex Hospital and Research Center . The Ld. CIT(A) also found the activity of the assessee in violation of provisions of Infant y and Distribution) Act, under: 8. As the appellant company has argued that being a trader of infant and child nutrition products it is not covered under "allied healthcare", let me briefly discuss the Infant Milk Substitutes, Feeding Bottles, and Infant Foods (IMS) Act. In 1992, India adopted the Infant Milk Substitutes, Feeding Bottles, and InfantFoods (IMS) Act. It was further amended in 2003 to strengthen certain provisions and close any loopholes infan Act comprehensively bans all forms of promotion of foods marketed to children up to two years of age. It also bans sponsorship to health care professionals and health organizations by these infant formula companies. V of the IMS act is a criminal offense and may result in fines and imprisonment. 8.1 Thus, IMS Act prohibits: 1. Advertising and promotion of infant milk substitutes, feeding bottles, or infant foods. 2. Unauthorized labelling of products, including complementary foods, such as the use of images of mothers and children or words that imply superiority to breastmilk. 3. Supply and distribution of infant milk substitutes, feeding bottles, or infant foods. 4. Educational materials, including advertisemen promote infant milk substitutes, feeding bottles, and infant foods. 5. Sponsorships, gifts, fellowships, and financial benefits to health care providers and their associations. 8.2.Violation of IMS Act, therefore, occurs when a manufacturer breach of the following manners: 1. Gives any kind of incentives like discounts or free gifts etc for the use or sale of infant milk substitutes, feeding bottles or infant foods to anyone. 2. Distributes information and ed to promotion of infant milk substitutes, feeding bottles and infant foods to mothers, families etc. (They can give educational material to health professionals like doctors, nurses etc provided it has information prescribed in cl 7 of the IMS Act, 2003. The education material should have only factual information and should not promote the products of the company). Mead Johnson (India) Pvt. Ltd., any loopholes infant formula companies had found. The IMS Act comprehensively bans all forms of promotion of foods marketed to children up to two years of age. It also bans sponsorship to health care professionals and health organizations by these infant formula companies. V of the IMS act is a criminal offense and may result in fines and imprisonment. Thus, IMS Act prohibits: 1. Advertising and promotion of infant milk substitutes, feeding bottles, or infant foods. 2. Unauthorized labelling of products, including complementary foods, such as the use of images of mothers and children or words that imply superiority to breastmilk. 3. Supply and distribution of infant milk substitutes, feeding bottles, or infant foods. 4. Educational materials, including advertisemen promote infant milk substitutes, feeding bottles, and infant 5. Sponsorships, gifts, fellowships, and financial benefits to health care providers and their associations. 8.2.Violation of IMS Act, therefore, occurs when a manufacturer breachessection 3 to 10 of the said Act in any of the following manners: 1. Gives any kind of incentives like discounts or free gifts etc for the use or sale of infant milk substitutes, feeding bottles or infant foods to anyone. 2. Distributes information and educational material related to promotion of infant milk substitutes, feeding bottles and infant foods to mothers, families etc. (They can give educational material to health professionals like doctors, nurses etc provided it has information prescribed in cl 7 of the IMS Act, 2003. The education material should have only factual information and should not promote the products of the company). Mead Johnson (India) Pvt. Ltd., ITA No. 2751/M/2022 9 AY 2012-13 t formula companies had found. The IMS Act comprehensively bans all forms of promotion of foods marketed to children up to two years of age. It also bans sponsorship to health care professionals and health organizations by these infant formula companies. Violation of the IMS act is a criminal offense and may result in fines 1. Advertising and promotion of infant milk substitutes, 2. Unauthorized labelling of products, including complementary foods, such as the use of images of mothers and children or words that imply superiority to breastmilk. 3. Supply and distribution of infant milk substitutes, 4. Educational materials, including advertisements, that promote infant milk substitutes, feeding bottles, and infant 5. Sponsorships, gifts, fellowships, and financial benefits to 8.2.Violation of IMS Act, therefore, occurs when a essection 3 to 10 of the said Act in any 1. Gives any kind of incentives like discounts or free gifts etc for the use or sale of infant milk substitutes, feeding ucational material related to promotion of infant milk substitutes, feeding bottles and infant foods to mothers, families etc. (They can give educational material to health professionals like doctors, nurses etc provided it has information prescribed in clause 7 of the IMS Act, 2003. The education material should have only factual information and should not promote the 3. Labels tins, cartons, accompanied leaflets of these products with pictures of mothers or babies, cartoons, phrases or any other such images. 4. Displays placards, posters in a hospital, nursing home, chemist shop etc for promoting infant milk substitutes, feeding bottles or infant foods 5. Makes financial inducements or gifts to health workers or to any members of the use of infant milk substitutes, feeding bottles or infant foods. 6. Demonstrates to mothers or their family members how to feed these products.However, a doctor can demonstrate this to the mother. 7. Gives pecuniary benefits to doctors, nurses or associations like IAP, IMA, organizing seminars, meeting, conferences, contest, fee of educational course, sponsoring for projects, research work or tours. 8. Fixes any commission for volume of sales of these 5.4 Further, the Ld. CIT(A) also made a comment in para 9 wherein he has observed that assessee conclusively had related laws pertaining to sales and marketing of infant and child nutrition food traded by it and under the relevant laws, the assessee’s action invites for penalty/prosecution. The relevant observation of the Ld. CIT(A) is reproduced as under: “9. The appellant company conclusively had violated all related lawspertainin child nutrition food traded by it.Whether it is violation of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 ('IMC Regulations') or the Infant Mead Johnson (India) Pvt. Ltd., 3. Labels tins, cartons, accompanied leaflets of these products with pictures of mothers or babies, cartoons, ses or any other such images. 4. Displays placards, posters in a hospital, nursing home, chemist shop etc for promoting infant milk substitutes, feeding bottles or infant foods 5. Makes financial inducements or gifts to health workers or to any members of his family for the purpose of promoting the use of infant milk substitutes, feeding bottles or infant 6. Demonstrates to mothers or their family members how to feed these products.However, a doctor can demonstrate this to the mother. pecuniary benefits to doctors, nurses or associations like IAP, IMA,NNF etc, for example, funds for organizing seminars, meeting, conferences, contest, fee of educational course, sponsoring for projects, research work 8. Fixes any commission for employees on the ba volume of sales of these, products.” Further, the Ld. CIT(A) also made a comment in para 9 wherein he has observed that assessee conclusively had related laws pertaining to sales and marketing of infant and child nutrition food traded by it and under the relevant laws, the assessee’s action invites for penalty/prosecution. The relevant observation of the Ld. CIT(A) is reproduced as under: The appellant company conclusively had violated all related lawspertaining to sales and marketing of infant and child nutrition food traded by it.Whether it is violation of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 ('IMC Regulations') or the Infant Mead Johnson (India) Pvt. Ltd., ITA No. 2751/M/2022 10 AY 2012-13 3. Labels tins, cartons, accompanied leaflets of these products with pictures of mothers or babies, cartoons, 4. Displays placards, posters in a hospital, nursing home, chemist shop etc for promoting infant milk substitutes, 5. Makes financial inducements or gifts to health workers or his family for the purpose of promoting the use of infant milk substitutes, feeding bottles or infant 6. Demonstrates to mothers or their family members how to feed these products.However, a doctor can demonstrate this pecuniary benefits to doctors, nurses or NNF etc, for example, funds for organizing seminars, meeting, conferences, contest, fee of educational course, sponsoring for projects, research work employees on the basis of Further, the Ld. CIT(A) also made a comment in para 9 wherein he has observed that assessee conclusively had violated all related laws pertaining to sales and marketing of infant and child nutrition food traded by it and under the relevant laws, the assessee’s action invites for penalty/prosecution. The relevant observation of the Ld. CIT(A) is reproduced as under: The appellant company conclusively had violated all g to sales and marketing of infant and child nutrition food traded by it.Whether it is violation of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 ('IMC Regulations') or the Infant Milk Substitutes, Feeding Bottles, a Act, the appellant's action calls for penalty &/or prosecution 9.1.This once again brings us to the judgment in the case of PeerlessHospitex Hospital and Research Center Ltd., [2022] 137 taxmann.com 359 (Calcutta), wherein the Hon'ble court, after going through a plethora of case laws, including that of Apex Laboratories (P.) Ltd. (supra), held, 26 my considered opinion petitioner being a participant in an actwhich is an offence and is prohibited by law is not entitled for any deduction under section 37(1) of the Income tax Act, 1961". Similar views were expressed by the Hon'ble Supreme Court whiledealing with the case of Apex Laboratories (P.) Ltd., [2022] 135 taxmann.com 286 (SC), as noted above. 9.2.Consequently, disallow the appellant tothe doctors and healthcare professionals amounting to Rs. 44,66,926/ other incidental expenses under the veil of organizing conference seminars and symposiums, appears to be justified. These grounds of appeal are thus, decided against the appellant. 5.5 As far as disallowance of conference and seminars expenses is concerned, though the assessee has contested that same is a part of research and development activity which aids knowledge, remain updated of enables the assessee to innovate andimprove however, we find that the Hon’ble Supreme Court in the case of Apex Laboratories (supra) has also considered the expenses on conference as disallowable in the form of healthcare practitioner/medical practitioners. In the instant case, the assessee has not supplied Mead Johnson (India) Pvt. Ltd., Milk Substitutes, Feeding Bottles, and Infant Foods (IMS) Act, the appellant's action calls for penalty &/or prosecution 9.1.This once again brings us to the judgment in the case of PeerlessHospitex Hospital and Research Center Ltd., [2022] 137 taxmann.com 359 (Calcutta), wherein the Hon'ble court, after going through a plethora of case laws, including that of Apex Laboratories (P.) Ltd. (supra), held, 26 my considered opinion petitioner being a participant in an actwhich is an offence and is prohibited by law is not any deduction under section 37(1) of the Income tax Act, 1961". Similar views were expressed by the Hon'ble Supreme Court whiledealing with the case of Apex Laboratories (P.) Ltd., [2022] 135 taxmann.com 286 (SC), as noted above. 9.2.Consequently, disallowance of the payments made by the appellant tothe doctors and healthcare professionals amounting to Rs. 44,66,926/-, on account of travelling and other incidental expenses under the veil of organizing conference seminars and symposiums, appears to be ied. These grounds of appeal are thus, decided against the appellant.” As far as disallowance of conference and seminars expenses is though the assessee has contested that same is a part of research and development activity which aids the as , remain updated of development of related fields the assessee to innovate andimprove owever, we find that the Hon’ble Supreme Court in the case of Apex Laboratories (supra) has also considered the expenses on conference as disallowable in the form of freebies healthcare practitioner/medical practitioners. In the instant case, the assessee has not supplied any name and address of the Mead Johnson (India) Pvt. Ltd., ITA No. 2751/M/2022 11 AY 2012-13 nd Infant Foods (IMS) Act, the appellant's action calls for penalty &/or prosecution 9.1.This once again brings us to the judgment in the case of PeerlessHospitex Hospital and Research Center Ltd., [2022] 137 taxmann.com 359 (Calcutta), wherein the Hon'ble High court, after going through a plethora of case laws, including that of Apex Laboratories (P.) Ltd. (supra), held, 26.........In my considered opinion petitioner being a participant in an actwhich is an offence and is prohibited by law is not any deduction under section 37(1) of the Income- Similar views were expressed by the Hon'ble Supreme Court whiledealing with the case of Apex Laboratories (P.) Ltd., [2022] 135 taxmann.com 286 (SC), as noted above. ance of the payments made by the appellant tothe doctors and healthcare professionals , on account of travelling and other incidental expenses under the veil of organizing conference seminars and symposiums, appears to be ied. These grounds of appeal are thus, decided against As far as disallowance of conference and seminars expenses is though the assessee has contested that same is a part of the assessee to gain development of related fields,and the assessee to innovate andimprove products line, owever, we find that the Hon’ble Supreme Court in the case of Apex Laboratories (supra) has also considered the expenses on freebies given to the healthcare practitioner/medical practitioners. In the instant case, name and address of the healthcare personnel, have been reimbursed. Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992, any other kind for the purpose of promoting the use or sale of the infant milk substitutes or infant foods for taking part in promoting of the infant milk substitutes Therefore, though the assessee is claiming that the expenses on conference and seminars were for under prohibited activity and therefore, expenses incurred thereon have been validly disallowed of the Assess by the Ld. CIT(A) invoking following Hon’ble Supreme Court in (supra). 5.6 The Ld. Counsel of the assessee submitted before us that comments made in para 9 jurisdiction of the Ld. CIT(A) held in the Hon’ble Supreme court in the case of Asst. Excise Commissioner &Ors. [(2009) 14 SCC 85] Counsel also relied on the decision of the the case of Uma Nath Pandey and Ors v. State of U.P. and Ors. [MANU/SC/0401/2009:AIR 2009 SC 2375] not be condemned un Mead Johnson (India) Pvt. Ltd., healthcare personnel, to whom the conference or travel expenses have been reimbursed. The section 4 of the Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992, strictly prohibit offer of inducement of any other kind for the purpose of promoting the use or sale of the infant milk substitutes or infant foods for taking part in promoting of the infant milk substitutes, feeding bottles and infant foods. Therefore, though the assessee is claiming that the expenses on conference and seminars were for his business,however, same prohibited activity and therefore, expenses incurred thereon have been validly disallowed of the Assessing Officer a by the Ld. CIT(A) invoking Explanation to section 37(1) of the Act ollowing Hon’ble Supreme Court in Apex Laboratories Ltd. The Ld. Counsel of the assessee submitted before us that comments made in para 9 of impugned order are beyond the jurisdiction of the Ld. CIT(A) and without application of mind held in the Hon’ble Supreme court in the case of V.K. Ashokan v. Asst. Excise Commissioner &Ors. [(2009) 14 SCC 85] Counsel also relied on the decision of the Hon’ble Supreme Court in Uma Nath Pandey and Ors v. State of U.P. and Ors. [MANU/SC/0401/2009:AIR 2009 SC 2375] that assessee should condemned unheard. As far as the grievance of the assessee Mead Johnson (India) Pvt. Ltd., ITA No. 2751/M/2022 12 AY 2012-13 conference or travel expenses the Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of Production, Supply of inducement of any other kind for the purpose of promoting the use or sale of the infant milk substitutes or infant foods for taking part in promoting nd infant foods. Therefore, though the assessee is claiming that the expenses on owever, same falls prohibited activity and therefore, expenses incurred thereon ing Officer and confirmed xplanation to section 37(1) of the Act, Apex Laboratories Ltd. The Ld. Counsel of the assessee submitted before us that are beyond the without application of mind as V.K. Ashokan v. Asst. Excise Commissioner &Ors. [(2009) 14 SCC 85]. The Ld. Hon’ble Supreme Court in Uma Nath Pandey and Ors v. State of U.P. and Ors. that assessee should As far as the grievance of the assessee regarding the comment the Ld. CIT(A) in para order is concerned, we are of the opinion that the said comments without providing opportunity levy penalty or filing prosecution for violation of provisions of the Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992, is within the domain of the relevant authority under said following due procedure of law and Ld CIT(A) was not required to express his conclusion in said matters, that too without providing any opportunity of being heard. However, we also note the recognized principle of Criminal Jurisprudence that anyone can or put the criminal law into motion except where the statue enacting or creating offence indicate to the contrary. restore this matter back to ld CIT (A) record and after providing due opportunity of being hea his opinion, if so, required in the matter. the appeal of the assessee are purpose. Mead Johnson (India) Pvt. Ltd., regarding the comment the Ld. CIT(A) in para 9 of the impugned order is concerned, we are of the opinion that the said comments opportunity of being heard are not levy penalty or filing prosecution for violation of provisions of the Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992, is within the domain of the relevant authority under said due procedure of law and Ld CIT(A) was not required to express his conclusion in said matters, that too without providing any opportunity of being heard. However, we also note the recognized principle of Criminal Jurisprudence that anyone can or put the criminal law into motion except where the statue enacting or creating offence indicate to the contrary. restore this matter back to ld CIT (A) for considering evidence on record and after providing due opportunity of being hea required in the matter. The relevant grounds of the appeal of the assessee are accordingly allowed for statistical Mead Johnson (India) Pvt. Ltd., ITA No. 2751/M/2022 13 AY 2012-13 9 of the impugned order is concerned, we are of the opinion that the said comments not justified. To levy penalty or filing prosecution for violation of provisions of the Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992, is within the domain of the relevant authority under said Act, due procedure of law and Ld CIT(A) was not required to express his conclusion in said matters, that too without providing any opportunity of being heard. However, we also note the recognized principle of Criminal Jurisprudence that anyone can set or put the criminal law into motion except where the statue enacting or creating offence indicate to the contrary. We accordingly for considering evidence on record and after providing due opportunity of being heard, express The relevant grounds of allowed for statistical 6. In the result, the appeal of the assessee is allowed partly for statistical purpose. Order pronounced 1963 on 13/02/2023. Sd/- (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 13/02/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// Mead Johnson (India) Pvt. Ltd., In the result, the appeal of the assessee is allowed partly for pronounced under Rule 34(4) of the ITAT Rules, /2023. Sd/ SANDEEP SINGH KARHAIL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar ITAT, Mumbai Mead Johnson (India) Pvt. Ltd., ITA No. 2751/M/2022 14 AY 2012-13 In the result, the appeal of the assessee is allowed partly for the ITAT Rules, Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, Assistant Registrar) ITAT, Mumbai