Bankers Cardiology Pvt. Ltd., Vadodara V. The Deputy Commissioner of Income Tax, Circle-1(1)(1), Vadodara

ITA 3524/AHD/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4268 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 28-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: RAJENDRA RAJPUR
• Keywords: Gift; Business expenditure; Earning of tax free income; Retrospective amendment; Corroborative evidences
• Section: 14A; 37(1); 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO.3524/AHD/2016 (ASSESSMENT YEAR : 2012-13) BANKERS CARDIOLOGY PVT.LTD. 12, TAGORE NAGAR OLD PADRA ROAD VADODARA - 390 015 VS. THE DCIT CIRCLE-1(1)(1) VADODARA [PAN NO. AACCB 2147 E] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI RAJENDRA |RAJPUR, AR RESPONDENT BY : SHRI LALIT P.JAIN, SR.DR DATE OF HEARING 06/08/2018 DATE OF PRONOUNCEMENT 26/10/2018 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL HAS BEEN FILED BY THE ASSESSEE BEFORE US AGAINST THE ORDER DATED 04.10.2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-1, VADODARA [LD.CIT(A) IN SHORT] FOR ASSESSMENT YEAR (AY) 2012 -13 ARISING OUT OF THE ORDER DATED 13.03.2015 PASSED BY THE DCIT, CIRCLE-1(1)(1), BAR ODA WITH THE FOLLOWING GROUNDS: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HA S ERRED IN FACTS AND IN LAW IN UPHOLDING THE DISALLOWANCE U/S.14A R.W. RULE 8D OF INCOME TAX ACT, 1961 OF RS.1,54,414/-. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN FACTS AND IN LAW IN UPHOLDING THE DISALLOWANCE OF DONATION EXPEN SES U/S.80G OF RS.15,75,000/-. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN FACTS AND IN LAW IN UPHOLDING THE DISALLOWANCE OF INTEREST ON TD S OF RS.1,10,590/-. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN FACTS AND IN LAW IN UPHOLDING THE DISALLOWANCE OF TRAVELLING EXP ENSES OF RS.28,36,700/-. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN FACTS AND IN LAW IN UPHOLDING THE CAPITAL NATURE OF EXPENSE OF R S.3,34,854/-. - 2 - ITA NO.3524/AHD/2016 BANKERS CARDIOLOGY PVT.LTD. VS. DCIT ASST.YEAR 2012-13 2. THE ASSESSEE IS A SUPER SPECIALTY CARDIAC HOSPIT AL OPERATING IN THE CITY OF VADODARA AND SURAT PROVIDING CARDIAC TREATMENT TO PATIENTS. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESS EE HAS SHOWN GROSS PROFIT OF RS.4,52,22,098/- ON THE TOTAL RECEIPTS OF RS.27,49, 71,580/- WHICH WORKS OUT THE GROSS PROFIT RATE AT 16.45% AS AGAINST THE GROSS PROFIT O F RS.3,52,28,195/- ON THE TOTAL RECEIPTS OF RS.23,31,25,376/- WHICH WORKS OUT THE GROSS PROF IT RATE AT 15.11% SHOWN IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. 3. THE FIRST GROUND RELATES TO DISALLOWANCE U/S.14A R.W. RULE 8D OF THE IT RULES, 1962 FOR THE ADMINISTRATIVE EXPENSES INCURRED FOR EARNIN G EXEMPT INCOME. THE CASE OF THE ASSESSEE IS THAT THE INVESTMENT MADE BY THE COMPANY WAS FROM ITS ACCUMULATED RESERVES AND SURPLUS AND THEREFORE DISALLOWANCE OF EXPENDITU RE IN RESPECT OF INTEREST AND ADMINISTRATIVE EXPENSES OF RS.1,54,414/- IS NOT PER MISSIBLE NEITHER THERE CAN BE ANY QUESTION OF ESTIMATION OF EXPENDITURE IN RESPECT OF INTEREST AND ADMINISTRATIVE EXPENSES U/S.14A R.W.RULE 8D OF IT RULES, 1962. THE ASSESSI NG OFFICER (AO) OBSERVED IN HIS ORDER THAT THE ASSESSEE IS HAVING INTEREST BEARING BORROWED FUNDS. AT THE SAME TIME ASSESSEE HAS SHOWN RS.6,58,071/- AS EXEMPT INCOME A S LONG TERM CAPITAL GAIN (LTCG) U/S.10(36) OF THE ACT AND RS.1,89,331/- AS EXEMPT D IVIDEND INCOME. SINCE THE ASSESSEE DID NOT CONSIDER THE INTEREST EXPENSES AND ADMINIST RATIVE EXPENSES, THE AO INVOKED RULE 8D AND MADE DISALLOWANCE OF RS.1,54,414/-. 4. DURING THE APPELLATE PROCEEDINGS, THE LD. CIT(A) GRANTED PARTIAL RELIEF TO THE ASSESSEE WITH THE FOLLOWING OBSERVATIONS: 4.2 DURING THE COURSE OF THE APPELLATE PROCEEDINGS , THE AR OF THE APPELLANT HAS SUBMITTED THAT THE AO HAS NOT RECORDED ANY SATISFACTION AS PR ESCRIBED UNDER SECTION 14A AND HAS STRAIGHT AWAY PROCEEDED TO DISALLOW SUCH EXPENSES. FURTHER, IT WAS CLAIMED THAT ON THOSE INVESTMENT ON WHICH DIVIDEND WAS RECEIVED SHOULD BE CONSIDERED FO R RULE 8D AND NOT THE ENTIRE INVESTMENT MADE FOR THE PURPOSES OF EARNING EXEMPT INCOME. ACC ORDINGLY, IT WAS SUBMITTED THAT OUT OF TOTAL INVESTMENTS, RS.1,70,70,591/- IN AY 2012-13 AND RS. 1,39,67,338/- IN AY 2011012 PERTAINS TO - 3 - ITA NO.3524/AHD/2016 BANKERS CARDIOLOGY PVT.LTD. VS. DCIT ASST.YEAR 2012-13 INVESTMENT ON WHICH NO EXEMPT INCOME WAS EARNED. TH E APPELLANT RELIED UPON CERTAIN DECISIONS. BUT, THESE DECISIONS HAVE BEEN IN CASES WERE NO EXE MPTION HAS BEEN EARNED BY THE APPELLANT. WHEREAS, IN THE CURRENT CASE, THE APPELLANT HAS EAR NED EXEMPT INCOME AND CLAIMED SUCH EXEMPTION ALSO. UNDER SUCH CIRCUMSTANCES, THE ENTIR E INVESTMENTS MADE FOR THE PURPOSES OF EARNING OF EXEMPT INCOME ARE REQUIRED TO BE CONSIDE RED FOR THIS PURPOSE. HENCE, THE APPELLANT CLAIM THAT ONLY RS.75,994/- SHOULD HAVE BEEN DISALL OWED IN PLACE OF RS.1,53,589/- AS DISALLOWED BY THE AO OUT OF ADMINISTRATIVE EXPENSES IS NOT COR RECT AND HENCE, THE SAME IS REJECTED. 4.2.1 SO FAR AS THE OTHER CLAIMS OF THE APPELLANT A RE CONCERNED, THE AO HAS SHOW CAUSED THE APPELLANT AND ONLY THEREAFTER PROCEEDED TO DISALLOW ANCE UNDER RULE 8D BY RECORDING HIS SATISFACTION THAT THE APPELLANTS FUNDS ARE MIXED F UNDS AND CERTAIN ADMINISTRATIVE EXPENSES MUST HAVE BEEN INCURRED FOR THE PURPOSES OF EARNING OF E XEMPT INCOME. IN THIS REGARD, IT IS ALSO SEEN THAT THE APPELLANT HAS MADE NEW INVESTMENTS FOR SUC H PURPOSE DURING THIS YEAR AND ALSO MUTUAL FUNDS HAVE BEEN SOLD TO EARN LONG TERM CAPITAL GAIN WHICH IS ALSO EXEMPT FROM INCOME. SUCH INVESTMENT OF TOP OFFICIALS OF THE COMPANY AND HENC E, THE DISALLOWANCE AS PER RULE 8D IS REQUIRED TO BE MADE OUT OF ADMINISTRATIVE EXPENSES. 4.2.2. THE APPELLANTS ANOTHER CLAIM IS THAT THE BO RROWED FUND HAS NOT BEEN USED FOR EARNING OF EXEMPT INCOME. IN THIS REGARD, IT IS SEEN THAT THE INTEREST PAYMENT IS NEGLIGIBLE I.E RS.85,300/- . THE AO HAS NOWHERE ESTABLISHED THAT THE BORROWED FU ND HAD BEEN USED FOR MAKING SUCH INVESTMENTS. AT THE SAME TIME, THE INTEREST FREE FU NDS AVAILABLE WITH THE APPELLANT ARE MORE THAN THE INVESTMENTS MADE FOR THE PURPOSE OF EARNING OF EXEMPT INCOME. HENCE, AS PER THE DECISION OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CI T-I, VS UTI BANK LTD., IN TAX AP. NO.118 OF 2012 VIDE ORDER DATED 22.03.2013, NO DISALLOWANCE OUR OF INTEREST EXPENDITURE COULD HAVE BEEN MADE IN THE PRESENT CASE. ACCORDINGLY, THE DISALLOW ANCE MADE UNDER RULE 8D IS RESTRICTED TO RS.1,53,589/- AND THE APPELLANT GETS PART RELIEF. 4.1. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. AT THE VERY OUTSET OF THE PROCEEDINGS, THE L D. REPRESENTATIVE OF THE ASSESSEE RELIED UPON A JUDGMENT PASSED BY THE HONBLE JURISDICTIONA L HIGH COURT IN THE MATTER OF PR.CIT-IV VS. SINTEX INDUSTRIES LTD. [2018] 93 TAXM ANN.COM 24 (SC) WHERE IT WAS HELD IN FAVOUR OF ASSESSEE TO THIS EFFECT THAT WHERE THE ASSESSEE HAS ALREADY HAD ITS OWN SURPLUS FUNDS AGAINST WHICH MINOR INVESTMENT WAS MADE QUEST ION OF MAKING ANY DISALLOWANCE OF EXPENDITURE IN RESPECT OF INTEREST AND ADMINISTRATI VE EXPENSES U/S.14A DOES NOT ARISE AND THEREFORE THERE WAS NO QUESTION OF ANY ESTIMATION O F EXPENDITURE IN RESPECT OF INTEREST AND ADMINISTRATIVE EXPENSES UNDER RULE 8D. - 4 - ITA NO.3524/AHD/2016 BANKERS CARDIOLOGY PVT.LTD. VS. DCIT ASST.YEAR 2012-13 6. THE LD.DR RELIED UPON THE ORDER PASSED BY THE AU THORITIES BELOW. 7. WE HAVE CONSIDERED THE JUDGMENT CITED BY THE LD.AR IN SUPPORT OF HIS CASE. WHILE DECIDING THE ISSUE, THE HONBLE HIGH COURT O BSERVED AS FOLLOWS: 9. CONSIDERING THE AFORESAID FACTS AND CIRCUMSTANC ES, MORE PARTICULARLY THE FACT THAT THE ASSESSEE WAS ALREADY HAVING ITS OWN SURPLUS FUND AN D THAT TOO TO THE EXTENT OF RS.2319.17 CRORES AGAINST WHICH INVESTMENT WAS MADE OF RS.111.09 CROR ES, THERE WAS NO QUESTION OF MAKING ANY DISALLOWANCE OF EXPENDITURE IN RESPECT OF INTEREST AND ADMINISTRATIVE EXPENSES UNDER SECTION 14A OF THE ACT, THEREFORE, THERE WAS NO QUESTION OF ANY ESTIMATION OF EXPENDITURE IN RESPECT OF INTEREST AND ADMINISTRATIVE EXPENSES OF RS.54,39,91 6/- UNDER RULE 8D OF THE RULES. UNDER THE CIRCUMSTANCES AND IN THE FACTS OF THE CASE, NARRATE D HEREIN ABOVE, IT CANNOT BE SAID THAT THE LEARNED TRIBUNAL HAS COMMITTED ANY ERROR IN DELETIN G THE DISALLOWANCE OF EXPENDITURE OF RS.54,39,916/- INCURRED IN RESPECT OF INTEREST AND ADMINISTRATIVE EXPENSES UNDER SECTION 14A OF THE ACT. WE ARE IN COMPLETE AGREEMENT WITH THE VIEW TAKEN BY THE LEARNED TRIBUNAL. AT THIS STAGE, DECISION OF DIVISION BENCH OF THIS COURT IN THE CASE OF PR. CIT V. INDIA GELATINE & CHEMICALS LTD. [2015] 376 ITR 553/[2016]66 TAXMANN. COM 356 NEEDS A REFERENCE. IN THE SAID DECISION, IT IS OBSERVED AND HELD BY THE DIVISION B ENCH OF THE COURT THAT WHEN THE ASSESSEE HAD SUFFICIENT INTEREST-FREE FUNDS OUT OF WHICH CONCERN ED INVESTMENTS HAD BEEN MADE, DISALLOWANCE UNDER SECTION 14A IS NOT JUSTIFIED. 8. HAVING HEARD THE LD. REPRESENTATIVE AP PEARING FOR THE PARTIES AND HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, PARTICU LARLY THE JUDGMENT CITED ABOVE BY THE LD. REPRESENTATIVE OF THE ASSESSEE, WE ARE OF THE C ONSIDERED VIEW THAT THE CASE IS IDENTICAL TO THAT OF THE JUDGMENT RELIED UPON. WE, THEREFORE, RESPECTFULLY FOLLOWING THE SAME, ALLOW THE GROUND OF APPEAL IN FAVOUR OF ASSES SEE BY DELETING THE ORDERS OF DISALLOWANCE U/S.14A R.W. RULE 8D OF THE ACT PASSED BY THE AUTHORITIES BELOW. THUS, GROUND NO.1 OF ASSESSEES APPEAL IS ALLOWED. 9. THE SECOND GROUND IS AGAINST UPHOLDING OF DONATI ON EXPENSES U/S.80G OF THE ACT TO THE TUNE OF RS.15,75,000/-. 9.1. THE FACTS LEADING TO THIS ISSUE IS THIS THAT I N THE AUDIT REPORT AT COLUMN 26 DEDUCTION U/S.80G HAS BEEN CERTIFIED TO THE EXTENT OF RS.2,50,000/- WHEREAS THE ASSESSEE - 5 - ITA NO.3524/AHD/2016 BANKERS CARDIOLOGY PVT.LTD. VS. DCIT ASST.YEAR 2012-13 HAS DEBITED RS.7,95,111/- IN THE PROFIT & LOSS ACCO UNT AGAINST DONATION EXPENSES. UPON ASKING, THE ASSESSEE SUBMITTED THE DONATION RECEIPT OF RS.20,75,000/-. THE ASSESSEE CLAIMED DONATION U/S.80G, TO THE TUNE OF RS.15,75, 000/- TO THE DISABLE WELFARE TRUST OF INDIA. HOWEVER, THE CERTIFICATE OF REGISTRATION OF THAT PARTICULAR TRUST WAS NOT SUBMITTED BEFORE THE LD. AO. THE AO HELD THAT RS.15,75,000/- AS UNEXPLAINED AND THE SAME WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 10. IN APPEAL, THE LD. CIT(A) DISALLOWED THE CLAIM OF DEDUCTION ON THE GROUND THAT THE TRUST WAS NOT APPROVED FOR SECTION 80G DEDUCTION TI LL MARCH-2011 AND THEREFORE WAS NOT ALLOWABLE TO RECEIVE DONATION DURING THE FY 2011-1 2. 11. TO THIS, THE LD. REPRESENTATIVE OF THE ASSES SEE SUBMITTED BEFORE US THAT ONCE APPROVAL IS GRANTED THE SAME IS CONTINUED TO BE VAL UED IN PERPETUALITY. HE RELIED UPON THE CBDT CIRCULAR DATED 27.10.2010 IN THIS RESPECT. TAKING INTO CONSIDERATION THE AFORESAID CIRCULAR HE FURTHER SUBMITTED THAT THOUGH THE APPROVE OF THE TRUST EXPIRED ON 31.03.2011, THE SAME WAS AUTOMATICALLY RENEWED IN PERPETUALITY SINCE THE SAME WAS NOT SPECIFICALLY WITHDRAWN. THEREFORE, ACCORDING TO TH E ASSESSEE THE SAID TRUST WAS ELIGIBLE TO RECEIVE DONATION RELEVANT FINANCIAL YEAR 2011-12. HE FURTHER ADDED THAT THE LD. CIT(A) OVERLOOKED THIS PARTICULAR CIRCULAR IN THE APPELLAT E PROCEEDINGS AND DISALLOWED THE DONATION OF RS.15,75,000/- U/S.80G OF THE ACT WHICH IS OTHERWISE LEGALLY ADMISSIBLE TO THE ASSESSEE AS CLAIMED. THE COPY OF THE TRUST REGI STRATION CERTIFICATE IS ALSO ON RECORD AT PAGE NOS.2 & 3 OF THE PAPER-BOOK NO.2 AS POINTED OU T BY HIM. 12. ON THE OTHER HAND, THE LD. DR RELIED UPON THE O RDERS OF THE AUTHORITIES BELOW. 13. WE FIND FROM THE ORDER PASSED BY THE LD. AO THA T THE REGISTRATION CERTIFICATE WAS NOT PROVIDED TO HIM BY THE ASSESSEE AND PRACTICALLY ON THAT BASIS DEDUCTION U/S.80G WAS NOT ALLOWED. SUBSEQUENTLY, THE LD. CIT(A) DELETED THE ADDITION MADE U/S.69C AS MADE - 6 - ITA NO.3524/AHD/2016 BANKERS CARDIOLOGY PVT.LTD. VS. DCIT ASST.YEAR 2012-13 BY THE AO, BUT DISALLOWED OF DEDUCTION U/S.80G ON ACCOUNT OF PAYMENT OF RS.15,75,000/- TO DISABLE WELFARE TRUST OF INDIA W HERE WE JOINT ISSUES. THE CBDT CIRCULAR NO.7/2010 [F.NO.197/21/2010-ITA-I] DATED 2 7.10.2010 SPECIFICALLY DEALS WITH THE APPROVALS FOR GRANTING BENEFIT U/S.80G IN THE F OLLOWING MANNER: 5. AS REGARDS APPROVALS GRANTED UPTO 1-10-2009 U NDER SECTION 80G BY THE COMMISSIONERS OF INCOME-TAX/DIRECTORS OF INCOME-TA X, PROVISO TO SECTION 80G(5)(VI) CLARIFIED THAT ANY APPROVAL SHALL HAVE EFFECT FOR S UCH ASSESSMENT YEAR OR YEARS NOT EXCEEDING FIVE ASSESSMENT YEARS AS MAY BE SPECIFIED IN THE AP PROVAL. THE ABOVE PROVISO WAS DELETED BY THE FINANCE (NO. 2) ACT, 2009. THE INTENT BEHIND TH E DELETION OF ABOVE PROVISO AS EXPLAINED IN THE EXPLANATORY MEMORANDUM TO FINANCE (NO. 2) BI LL, 2009 WAS AS UNDER: 'FURTHER AS PER CLAUSE (V/) OF SUB-SECTION (5) OF S ECTION 80G OF THE INCOME-TAX ACT, 1961, THE INSTITUTIONS OR FUNDS TO WHICH THE DONATIONS ARE MA DE HAVE TO BE APPROVED BY THE COMMISSIONER OF INCOME-TAX IN ACCORDANCE WITH THE R ULES PRESCRIBED IN RULE 11AA OF THE INCOME-TAX RULES, 1962. THE PROVISO TO THIS CLAUSE PROVIDES THAT ANY APPROVAL GRANTED UNDER THIS CLAUSE SHALL HAVE EFFECT FOR SUCH ASSESSMENT Y EAR OR YEARS, NOT EXCEEDING FIVE ASSESSMENT YEARS, AS MAY BE SPECIFIED IN THE APPROVAL. DUE TO THIS LIMITATION IMPOSED ON THE VALIDITY OF S UCH APPROVALS, THE APPROVED INSTITUTIONS OR FUNDS HAVE TO BEAR THE HARDSHIP OF GETTING THEIR AP PROVALS RENEWED FROM TIME TO TIME. THIS IS UNDULY BURDENSOME FOR THE BONA FIDE INSTITUTIONS OR FUNDS AND ALSO LEADS TO WASTAGE OF TIME AND RESOURCES OF THE TAX ADMINISTRATION IN RENEWING SUCH APPROVALS IN A ROUTINE MANNER. THEREFORE, IT IS PROPOSED TO OMIT THE PROVISO TO CL AUSE (V/) OF SUB-SECTION (5) OF SECTION 80G TO PROVIDE THAT THE APPROVAL ONCE GRANTED SHALL CON TINUE TO BE VALID IN PERPETUITY. FURTHER, THE COMMISSIONER WILL ALSO HAVE THE POWER OF WITHDR AW THE APPROVAL IF THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH INSTITUTION O R FUND ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE I NSTITUTION OR FUND. THIS AMENDMENT WILL TAKE EFFECT FROM 1ST DAY OF OCTOBER, 2009. ACCORDIN GLY, EXISTING APPROVALS EXPIRING ON OR AFTER 1ST OCTOBER, 2009 SHALL BE DEEMED TO HAVE BEE N EXTENDED IN PERPETUITY UNLESS SPECIFICALLY WITHDRAWN.' IT APPEARS THAT SOME DOUBTS STILL PREVAIL ABOUT THE PERIOD OF VALIDITY OF APPROVAL UNDER SECTION 80G SUBSEQUENT TO 1-10-2009, ESPECIALLY IN VIEW OF THE FACT THAT NO CORRESPONDING CHANGE HAS BEEN MADE IN RULE 11 A(4). TO REMOVE ANY DOUBTS IN THIS REGARD, IT IS REITERATED THAT ANY APPROVAL UNDER SECTION 80G(5) ON OR AFTER 1-10-2009 WOULD BE A ONE TIME APPROVAL WHICH WOULD BE VALID TILL IT IS WITHDRAWN. - 7 - ITA NO.3524/AHD/2016 BANKERS CARDIOLOGY PVT.LTD. VS. DCIT ASST.YEAR 2012-13 13.1. TAKING INTO CONSIDERATION THE ESSENCE OF THE PARTICULAR CIRCULAR, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE IS ENTITLED TO GET DEDUCTION U/S.80G OF THE ACT SINCE THE DISABLE WELFARE TRUST OF INDIA WAS RIGHTLY ELIG IBLE TO RECEIVE DONATIONS AS CLAIMED BY THE ASSESSEE. 14. THE THIRD GROUND HAS NOT BEEN PRESSED BY THE LD. AR AND THEREFORE THE SAME IS DISMISSED. 15. THE UPHOLDING OF CAPITAL NATURE OF EXPENSES OF RS.3,34,854/- MADE BY THE LD. CIT(A) HAS BEEN CHALLENGED IN GROUND NO.4. 16. THE ASSESSEE COMPANY REGULARLY ORGANIZES ACADEM IC CONFERENCES FOR DOCTORS KNOWN AS CARDCON I.E. CARDIAC CONFERENCE. FOR S UCH PURCHASES, THE COMPANY RECEIVES CONTRIBUTIONS FROM PHARMACEUTICAL COMPANIE S. THE ASSESSEE DEBITED AN AMOUNT OF RS.28,36,700/- UNDER THE HEAD TRAVELLING EXPENS ES. FROM THE DETAILS FURNISHED, IT WAS FOUND THAT THE LEDGER OF EXPENSES WAS AGAINST T HE SEMINAR ARRANGED AT HONG KONG. THE DETAILS OF PURPOSES OF SUCH SEMINAR NAMES, ADDR ESSES AND PANS OF THE ADDRESSES WHO HAD ATTENDED THE SAID SEMINAR WAS ALSO CALLED F OR AS WELL AS SUBSEQUENT OUTCOME AND/OR SIMILAR BENEFIT DERIVED OUT OF THE SEMINAR I N PROCUREMENT OF BUSINESS WAS ALSO DIRECTED TO BE FURNISHED. THE BUSINESS EXIGENCY/EX PEDITION OF THE TRAVELLING EXPENSES WITH SUPPORTING EVIDENCES WERE ALSO CALLED FOR. HO WEVER, THE ASSESSEE COULD NOT EXPLAIN THE PURPOSE AND SUBSEQUENT OUTCOME OF THE SEMINAR, NEITHER THE ASSESSEE COULD SHOW THAT THE EXPENSES WERE WHOLLY AND EXCLUSIVELY FOR BUSIN ESS PURPOSE. ADDITION OF RS.28,36,700/- WAS MADE BY THE AO IN THE HANDS OF T HE ASSESSEE. 17. IN APPEAL, THE LD. CIT(A) IN HIS ORDER CATEGORI CALLY MENTIONED THAT A LIST OF PERSONS CLAIMING THEM TO BE DOCTORS FOR WHOM SUCH E XPENDITURE WAS MADE AS FURNISHED BY THE ASSESSEE BUT NAMES OF SEVERAL PERSONS INSTE AD OF PAN NO DATA HAS BEEN - 8 - ITA NO.3524/AHD/2016 BANKERS CARDIOLOGY PVT.LTD. VS. DCIT ASST.YEAR 2012-13 MENTIONED. IT ALSO APPEARS FROM SUCH DOCUMENT THA T SPOUSES OF SOME OF THOSE DOCTORS HAD ALSO TRAVELLED ON THE TICKETS PROVIDED BY THE A SSESSEE. THE SAME HAS HAPPENED IN MAJORITY OF THE CASES WHERE THE PANS OF SPOUSES WER E NOT AVAILABLE. IN THE ABSENCE OF ANY DETAILS OF THE SEMINAR, THE LD. CIT(A) CAME TO A CONCLUSION THAT THE SO-CALLED SEMINAR EXPENSES AS CLAIMED BY THE ASSESSEE WAS IN CURRED FOR PLEASURE TRIP OF CERTAIN PERSONS AND NOT WHOLLY OR EXCLUSIVELY FOR THE BUSIN ESS OF THE ASSESSEE. SUCH EXPENSES WERE ALSO PROHIBITED BY REGULATION 6.4.1 OF THE IND IAN MEDICAL COUNCIL (PROFESSIONAL CONDUCT, AND ETIQUETTE & ETHICS) REGULATION 2002 WH ICH CREATES BAR ON THE PHYSICIANS TO RECEIVE GIFTS OR COMMISSION OR BOOKS IN CONSIDERATI ON OF OR FOR REFERRING RENDERING OR PROCURING ANY PATIENT FOR MEDICAL SURGICAL OR OTHER TREATMENT. THE LD. CIT(A) THUS DISALLOWED SUCH EXPENSES. 18. AT THE TIME OF HEARING OF THE INSTANT APPEAL, T HE LD. COUNSEL FOR THE ASSESSEE SUBMITTED AT LENGTH BEFORE US. HE SUBMITTED THAT T HE REGULATION 6.4.1 OF THE INDIAN MEDICAL COUNCIL (PROFESSIONAL CONDUCT, AND ETIQUETT E & ETHICS) REGULATION 2002 IS NOT BINDING UPON THE ASSESSEE COMPANY. THE SAID PROPOS ITION HAS BEEN CLARIFIED IN THE JUDGMENT OF MAX HOSPITAL VS. MCI[(WP(C) 1334 OF 201 3] PASSED BY THE HONBLE DELHI HIGH COURT ON 10.01.2014. HE FURTHER ARGUED BEFORE US THAT THE OBJECT OF MEDICAL CONFERENCES IS TO UPDATE THE PARTICIPANTS WITH THE LATEST DEVELOPMENT IN MEDICAL FIELD SPECIFICALLY IN THE DISCIPLINE OF CARDIOLOGY. SUCH CONFERENCES ARE CONDUCTED BY RENOWNED CARDIOLOGISTS OF THE COMPANY THROUGH PRESENTATIONS/ CASE STUDY DISCUSSIONS/INTERACTIVE SESSIONS IN ORDER TO PROVIDE CORRECT DIAGNOSIS AND TREATMENT WITH THE HELP OF NEW TECHNOLOGICAL DEVELOPMENTS IN THE FIELD OF CARDIOLO GY; THE SAME IS CONDUCTED PARTICULARLY TO UPDATE THE DOCTORS WITH SUCH LATEST DEVELOPMENTS IN TREATING THE PATIENTS. THIS SURELY ENHANCES THE KNOWLEDGE AND UPGRADING OF SKILLS OF T HE PROFESSIONALS AND THUS UPGRADING THE BUSINESS OF THE COMPANY. THE ENTIRE ARRANGEMEN TS FOR THE CONFERENCE INCLUDING AIR TICKET BOOKING, HOTEL/CONFERENCE VENUE BOOKING/LODG ING AND BOARDING/OTHER TRAVEL ARRANGEMENTS/VISA AND PASSPORT WERE OUTSOURCED TO S OTC COMPANY. THE EXPENDITURE - 9 - ITA NO.3524/AHD/2016 BANKERS CARDIOLOGY PVT.LTD. VS. DCIT ASST.YEAR 2012-13 INCURRED FOR THE CONFERENCES HAVE ALSO BEEN ALLOWED AS DEDUCTIBLE EXPENDITURE OVER THE YEARS AND THE SURPLUS EARNED BY THE ASSESSEE COMPAN Y IN ORGANIZING SUCH CONFERENCE HAS BEEN OFFERED TO TAX. MCI GUIDELINES AND THE CIRCUL AR NO.5 OF 2012 DATED 01.08.2012 HAS NO ROLE TO PLAY IN DECIDING THE ISSUE SINCE THE SAM E HAS NOT BEEN ISSUED WITH RETROSPECTIVE EFFECT. IN SUPPORT OF THE SAME, HE RELIED UPON THE JUDGEMENT OF SOLVAY PHARMA INDIA LTD. VS. PRINCIPAL COMMISSIONER OF INCOME-TAX REPORTED A T (2018) 89 TAXMANN.COM 249 (MUMBAI TRIB.). 19. ON THE CONTRARY, THE LD. REPRESENTATIVE OF THE DEPARTMENT RELIED UPON THE ORDERS PASSED BY THE AUTHORITIES BELOW. 20. WE HAVE HEARD THE LD. REPRESENTATIVES APPEARING FOR THE RESPECTIVE PARTIES. WE HAVE PERUSED THE RELEVANT MATERIALS AVAILABLE ON RE CORD. WE FIND THAT THE AUTHORITIES BELOW HAS PARTICULARLY REJECTED THE CLAIM OF THE AP PLICANT RELYING UPON THE REGULATION 6.4.1 OF THE INDIAN MEDICAL COUNCIL (PROFESSIONAL C ONDUCT, AND ETIQUETTE & ETHICS) REGULATION 2002. THE JUDGEMENT RELIED UPON IN THE MATTER OF MAX HOSPITAL, PITAMPURA VS. MEDICAL COUNCIL OF INDIA (WPC 1334/2013) DECI DED THE SAME NOT APPLICABLE TO THE HOSPITALS. WHILE DOING SO, THE HONBLE HIGH COURT AT DELHI OBSERVED AS FOLLOWS: 7. IN THE COUNTER AFFIDAVIT FILED BY THE RESPONDEN TS, IT IS NOT DISPUTED THAT THE MCI UNDER THE 2002 REGULATIONS HAS JURISDICTION LIMITED TO TAKING ACTI ON ONLY AGAINST THE REGISTERED MEDICAL PRACTITIONERS. IT'S PLEA HOWEVER, IS THAT IT HAS NO T PASSED ANY ORDER AGAINST THE PETITIONER HOSPITAL THEREFORE; THE PETITIONER CANNOT HAVE ANY GRIEVANCE AGAINST THE IMPUGNED ORDER. AT THE SAME TIME, IT IS STATED THAT ONLY SIMPLE OBSERVATIONS WERE MADE B Y THE ETHICS COMMITTEE OF THE MCI ABOUT THE STATE OF AFFAIRS IN THE PETITIONER HOSPITAL AND THE SAME DID NOT HARM ANY LEGAL RIGHT OR INTEREST OF T HE PETITIONER. IT WILL BE APPOSITE TO EXTRACT THE RELE VANT PARAGRAPHS OF THE COUNTER AFFIDAVIT FILED BY T HE MCI AS UNDER:- '4. PRELIMINARY OBJECTIONS: - 10 - ITA NO.3524/AHD/2016 BANKERS CARDIOLOGY PVT.LTD. VS. DCIT ASST.YEAR 2012-13 (I) THAT THE INSTANT WRIT PETITION IS NOT MAINTAINA BLE UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA AS THERE IS NO CAUSE OF ACTION FOR FILING OF THIS INST ANT PETITION. THE MCI HAS NOT PASSED ANY ORDER AGAINST THE PETITIONER IN THE IMPUGNED MINUTES OF M EETING DATED 27.10.2012, THEREFORE, THERE IS NO CAUSE OF ACTION FOR FILING THE INSTANT WRIT PETITIO N. (II) THAT THE MCI HAS NOT PASSED ANY ORDER AGAINST THE PETITIONER AND NOR DOES THE IMPUGNED MINUTES OF MEETING DATED 27.10.2012 AFFECT ANY LEGAL RIGHT OR INTEREST OF THE PETITIONER WHICH THE PETITIONER SEEKS TO ENFORCE BY FILING THIS WRIT PETITION AND T HUS THE SAME IS NOT MAINTAINABLE. (III) THAT THE JURISDICTION OF MCI IS LIMITED ONLY TO TAKE ACTION AGAINST THE REGISTERED MEDICAL PROFESSIONALS UNDER THE INDIAN MEDICAL COUNCIL (PRO FESSIONAL CONDUCT, ETIQUETTE AND ETHICS) REGULATIONS, 2002 (HEREINAFTER THE 'ETHICS REGULATI ONS') AND HAS NO JURISDICTION TO PASS ANY ORDER AFFECTING RIGHTS/INTERESTS OF ANY HOSPITAL, THEREFO RE THE MCI COULD NOT HAVE PASSED AND HAS NOT PASSED, ANY ORDER AGAINST THE PETITIONER WHICH CAN BE ASSAILED BEFORE THIS HON'BLE COURT IN WRIT JURISDICTION. (IV) THAT A SIMPLE OBSERVATION MADE BY THE ETHICS C OMMITTEE OF MCI ABOUT THE STATE OF AFFAIRS IN THE PETITIONER HOSPITAL HAS HARMED NO LEGAL RIGHT/INTER EST OF THE PETITIONER FOR WHICH A WRIT CAN BE ISSUE D BY THIS HON'BLE COURT AGAINST THE ANSWERING RESPOND ENT. (V) THAT THE PETITIONER CONTENDS THAT AN ADVERSE OR DER HAS BEEN PASSED BY THE MCI AND THAT TOO WITHOUT HEARING THE PETITIONER. BOTH THESE CONTENTI ONS OF THE PETITIONER ARE INCORRECT AND FRIVOLOUS A S FIRSTLY, THERE IS NO ADVERSE ORDER MADE BY THE MCI AGAINST THE PETITIONER AS MCI DOES NOT HAVE ANY SUCH JURISDICTION; SECONDLY, THE PETITIONER WAS THR OUGHOUT REPRESENTED BEFORE THE ETHICS COMMITTEE OF MCI DURING THE PROCEEDINGS INITIATED ON COMPLAIN T OF ONE MR. SUNIL MANCHANDA AGAINST SOME OF THE DOCTORS WORKING IN THE PETITIONER HOSPITAL. THE PETITIONER WAS HEARD THROUGH ITS ADVOCATES ON SEVERAL OCCASIONS AND HAD SUBMITTED SEVERAL DOCUMEN TS ALSO IN SUPPORT OF THEIR STAND.' 8. IT IS CLEARLY ADMITTED BY THE RESPONDENT THAT IT HAS NO JURISDICTION TO PASS ANY ORDER AGAINST THE PETITIONER HOSPITAL UNDER THE 2002 REGULATIONS. IN FACT, IT IS STATED THAT IT HAS NOT PASSED ANY ORDER AGAINST THE PETITIONER HOSPITAL. THUS, I NEED NOT G O INTO THE QUESTION WHETHER THE ADEQUATE INFRASTRUCTURE FACILITIES FOR APPROPRIATE POST-OPER ATIVE CARE WERE IN FACT IN EXISTENCE OR NOT IN THE PETITIONER HOSPITAL AND WHETHER THE PRINCIPLES OF N ATURAL 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 AN D SINCE IT HAD NO JURISDICTION TO GO INTO THE SAME, T HE OBSERVATIONS WERE UNCALLED FOR AND CANNOT BE SUSTAINED. 9. SINCE THE MCI HAD NO JURISDICTION TO GO INTO THE INFRASTRUCTURE FACILITIES, I NEED NOT ALSO GO INTO THE ASPECT THAT IN THE YEAR 2011, THE FACILITIES AV AILABLE IN THE HOSPITAL WERE INSPECTED AND WERE FOUND TO BE IN ORDER. 10. THE PETITION THEREFORE HAS TO SUCCEED. I HEREBY ISSUE A WRIT OF CERTIORARI QUASHING THE ADVERSE OBSERVATIONS PASSED BY THE MCI AGAINST THE PETITION ER HOSPITAL HIGHLIGHTED IN PARA 1 ABOVE. 11. THE WRIT PETITION IS ALLOWED IN ABOVE TERMS. - 11 - ITA NO.3524/AHD/2016 BANKERS CARDIOLOGY PVT.LTD. VS. DCIT ASST.YEAR 2012-13 20.1. THE SAID ISSUE WAS ALSO DECIDED IN THE MATT ER OF SOLVAY PHARMA INDIA LTD. VS. PR.CIT, THE RELEVANT PORTION THEREOF IS AS FOLLOWS: 20. THE INTENT OF THE APPLICABILITY OF THE MCI REG ULATIONS WAS ALWAYS TO COVER ONLY INDIVIDUAL MEDICAL PRACTITIONERS, AND NOT THE PHARM ACEUTICAL AND MEDICAL DEVICE COMPANIES. WHETHER THERE IS ANY CONTRAVENTION OF THE MCI REGUL ATIONS OR NOT IS A MATTER WHICH CAN BE DECIDED BY THE MCI ITSELF AND NOT BY THE INCOME-TAX DEPARTMENT. FURTHERMORE, THE MCI HAS ITSELF ADMITTED THAT IT HAS NO JURISDICTION WHATSOE VER OVER ANY ASSOCIATION/ SOCIETY ETC AND ITS JURISDICTION IS CONFINED ONLY TO THE CONDUCT OF THE REGISTERED MEDICAL PRACTITIONERS. FURTHERMORE, SINCE THE SAID MCI REGULATIONS 2002 CO NTAINS PUNITIVE 'PROVISIONS, IT HAS TO BE READ STRICTLY AND CONSEQUENTLY IT CAN APPLY ONLY TO MEDICAL PRACTITIONERS AND PHYSICIANS AND NOT TO THE PHARMACEUTICAL COMPANIES. FURTHER, M CI ACT, 1956 DOES NOT APPLY PHARMACEUTICAL COMPANIES AND CONSEQUENTLY MCI REGUL ATIONS 2002 CANNOT APPLY TO SUCH COMPANIES. 21. CBDT CIRCULAR NO. 5 OF 2012 SEEKS TO DISALLOW E XPENDITURE INCURRED BY PHARMACEUTICAL COMPANIES INTER-ALIA IN PROVIDING 'FREEBIES' TO DOC TORS IN VIOLATION OF THE MCI REGULATIONS. THE TERM 'FREEBIES' HAS NEITHER BEEN DEFINED IN THE INCOME-TAX ACT NOR IN THE MCI REGULATIONS'. HOWEVER, THE EXPENDITURE SO INCURRED BY ASSESSEE DOES NOT AMOUNT TO PROVISION OF 'FREEBIES' TO MEDICAL PRACTITIONERS. T HE EXPENDITURE INCURRED BY IT IS IN THE NORMAL COURSE OF ITS BUSINESS FOR THE PURPOSE OF MA RKETING OF ITS PRODUCTS AND DISSEMINATION OF KNOWLEDGE ETC AND NOT WITH A VIEW TO GIVING SOME THING FREE OF CHARGE TO THE DOCTORS. THE ACT OF GIVING SOMETHING FREE OF CHARGE IS INCIDENTA L TO THE MAIN OBJECTIVE OF PRODUCT AWARENESS. ACCORDINGLY, IT DOES NOT AMOUNT TO PROVI SION OF FREEBIES. CONSEQUENTLY, THERE IS NO QUESTION OF CONTRAVENTION OF THE MCI REGULATIONS AND APPLICABILITY OF CIRCULAR NO. 5 OF 2012 FOR DISALLOWANCE OF THE EXPENDITURE. 22. THE DEPARTMENT HAS NOT BROUGHT ANYTHING ON RECO RD TO SHOW THAT THE AFORESAID REGULATION ISSUED BY MEDICAL COUNCIL OF INDIA IS ME ANT FOR PHARMACEUTICAL COMPANIES IN ANY MANNER. ON THE CONTRARY, THE ASSESSEE HAS BROUGHT T O THE NOTICE OF THE BENCH THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF MAX HOSPITAL V. MCI'M [WPC 1334 OF 2013, DATED 10-1- 2014], WHEREIN THE MEDICAL COUNCIL OF INDIA ADMITTE D THAT THE INDIAN MEDICAL COUNCIL REGULATION OF 2002 HAS JURISDICTION TO TAKE ACTION ONLY AGAINST THE MEDICAL PRACTITIONERS AND NOT TO HEALTH SECTOR INDUSTRY. FROM THE AFORESAID D ECISION, IT IS OSTENSIBLY CLEAR THAT THE MEDICAL COUNCIL OF INDIA HAS NO JURISDICTION TO PAS S ANY ORDER OR REGULATION AGAINST ANY HOSPITAL OR ANY HEALTH CARE SECTOR UNDER ITS 2002 R EGULATION. SO ONCE THE INDIAN MEDICAL COUNCIL REGULATION DOES NOT HAVE ANY JURISDICTION N OR HAS ANY AUTHORITY UNDER LAW UPON THE PHARMACEUTICAL COMPANY OR ANY ALLIED HEALTH SECTOR INDUSTRY, THEN SUCH A REGULATION CANNOT - 12 - ITA NO.3524/AHD/2016 BANKERS CARDIOLOGY PVT.LTD. VS. DCIT ASST.YEAR 2012-13 HAVE ANY PROHIBITORY EFFECT ON THE PHARMACEUTICAL C OMPANY LIKE THE ASSESSEE. IF MEDICAL COUNCIL REGULATION DOES NOT HAVE ANY JURISDICTION U PON PHARMACEUTICAL COMPANIES AND IT IS INAPPLICABLE UPON PHARMA COMPANIES LIKE ASSESSEE TH EN, 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. 23. NOW COMING TO THE EXPLANATION TO SECTION 37(1) INVOKED BY THE CIT, THE EXPLANATION PROVIDES AN EMBARGO UPON ALLOWING ANY EXPENDITURE I NCURRED 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 EXPEN DITURE 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 PHARMACEUTIC AL COMPANY NOT TO INCUR ANY DEVELOPMENT OR SALES PROMOTION EXPENSES. A LAW WHIC H IS APPLICABLE TO DIFFERENT CLASS OF PERSONS OR PARTICULAR CATEGORY OF ASSESSEE, SAME CA NNOT BE MADE APPLICABLE TO ALL. THE REGULATION OF 2002 ISSUED BY THE MEDICAL COUNCIL OF INDIA (SUPRA), PROVIDES LIMITATION/CURB/PROHIBITION FOR MEDICAL PRACTITIONE RS ONLY AND NOT FOR PHARMACEUTICAL COMPANIES. HERE THE MAXIM OF 'EXPRESSIO UNIUS EST E XCLUSIO ALTERIUS' IS CLEARLY APPLICABLE, THAT IS, IF A PARTICULAR EXPRESSION IN THE STATUTE IS EXPRESSLY STATED! FOR PARTICULAR CLASS OF ASSESSEE THEN BY IMPLICATION WHAT HAS NOT BEEN STAT ED OR EXPRESSED IN THE STATUTE LIAS TO BE EXCLUDED FOR OTHER CLASS OF ASSESSEE. IF THE MEDICA L COUNCIL REGULATION IS APPLICABLE TO MEDICAL PRACTITIONERS THEN IT CANNOT BE MADE APPLIC ABLE TO PHARMA OR ALLIED HEALTH CARE COMPANIES. IF SECTION 37(1) IS APPLICABLE TO AN ASS ESSEE CLAIMING THE EXPENSE THEN BY IMPLICATION, ANY IMPAIRMENT CAUSED BY EXPLANATION 1 WILL APPLY TO THAT ASSESSEE ONLY. ANY IMPAIRMENT OR PROHIBITION BY ANY LAW/REGULATION ON A DIFFERENT CLASS OF PERSON/ASSESSEE WILL NOT IMPINGE UPON THE ASSESSEE CLAIMING THE EXPENDIT URE UNDER THIS SECTION. 24. WE OBSERVE THAT THE CBDT CIRCULAR DATED 1-8-201 2 (SUPRA) IN ITS CLARIFICATION HAS ENLARGED THE SCOPE AND APPLICABILITY OF 'INDIAN MED ICAL COUNCIL REGULATION 2002' BY MAKING IT APPLICABLE TO THE PHARMACEUTICAL COMPANIES OR AL LIED HEALTH CARE SECTOR INDUSTRIES. SUCH AN ENLARGEMENT OF SCOPE OF MCI REGULATION TO THE PH ARMACEUTICAL COMPANIES BY THE CBDT IS WITHOUT ANY ENABLING PROVISIONS EITHER UNDER THE PR OVISIONS OF INCOME TAX LAW OR BY ANY PROVISIONS UNDER THE INDIAN MEDICAL COUNCIL REGULAT IONS. THE CBDT CANNOT PROVIDE CASUS OMISSUS TO A STATUTE OR NOTIFICATION OR ANY REGULAT ION WHICH HAS NOT BEEN EXPRESSLY PROVIDED THEREIN. THE CBDT CAN TONE DOWN THE RIGOURS OF LAW AND ENSURE A FAIR ENFORCEMENT OF THE PROVISIONS BY ISSUING CIRCULARS AND BY CLARIFYING T HE STATUTORY PROVISIONS. CBDT CIRCULARS ACT LIKE 'CONTEMPORANEA EXPOSITIO' IN INTERPRETING THE STATUTORY PROVISIONS AND TO ASCERTAIN THE TRUE MEANING ENUNCIATED AT THE TIME WHEN STATUT E 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 RELIEFER FOR C LARIFYING THE PROVISIONS OF LAW AND CANNOT IMPOSE A BURDEN ON THE ASSESSEE, LEAVE ALONE CREATI NG A NEW BURDEN BY ENLARGING THE SCOPE OF A DIFFERENT REGULATION ISSUED UNDER A DIFFERENT ACT SO AS TO IMPOSE ANY KIND OF HARDSHIP OR - 13 - ITA NO.3524/AHD/2016 BANKERS CARDIOLOGY PVT.LTD. VS. DCIT ASST.YEAR 2012-13 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 IMPARI TY, SAME CANNOT BE RECKONED RETROSPECTIVELY. THE BENEFICIAL CIRCULAR MAY APPLY RETROSPECTIVELY BUT A CIRCULAR IMPOSING A BURDEN HAS TO BE APPLIED PROSPECTIVELY ONLY. HERE I N THIS CASE THE CBDT HAS ENLARGED THE SCOPE OF 'INDIAN MEDICAL COUNCIL REGULATION, 2002' AND MADE IT APPLICABLE FOR THE PHARMACEUTICAL COMPANIES. THEREFORE, SUCH A CBDT CI RCULAR CANNOT BE RECKONED TO HAVE RETROSPECTIVE EFFECT. THE FREE SAMPLE OF MEDICINE I S ONLY TO PROVE THE EFFICACY AND TO ESTABLISH THE TRUST OF THE DOCTORS ON THE QUALITY OF THE DRUG S. THIS AGAIN CANNOT BE RECKONED AS FREEBIES GIVEN TO THE DOCTORS BUT FOR PROMOTION OF ITS PRODU CTS. THE PHARMACEUTICAL COMPANY, WHICH IS ENGAGED IN MANUFACTURING AND MARKETING OF PHARMA CEUTICAL PRODUCTS, CAN PROMOTE ITS SALE AND BRAND ONLY BY ARRANGING SEMINARS, CONFEREN CES AND THEREBY CREATING AWARENESS AMONGST DOCTORS ABOUT THE NEW RESEARCH IN THE MEDIC AL FIELD AND THERAPEUTIC AREAS, ETC. EVERY DAY THERE ARE NEW DEVELOPMENTS TAKING PLACE A ROUND 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 THEMSELV ES UPDATED WITH THE LATEST DEVELOPMENTS IN THE MEDICINE AND THE MAIN OBJECT OF SUCH CONFERE NCES AND SEMINARS IS TO UPDATE THE DOCTORS OF THE LATEST DEVELOPMENTS, WHICH IS BENEFI CIAL TO THE DOCTORS IN TREATING THE PATIENTS AS WELL AS THE PHARMACEUTICAL COMPANIES. 25. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIN D ANY MERIT IN THE ORDER PASSED U/S.263. 20.2. WHETHER THE CBDT CIRCULAR ISSUED ON 01.08.201 2 HAVING ANY RETROSPECTIVE EFFECT SO AS TO APPLY THE SAME IN THE CASE OF THE ASSESSEE FOR THE AY 2012-13 ANSWERED BY THE RATIO LAID DOWN IN THE JUDGEMENT OF CADILA PHARMACE UTICALS LTD. VS. DCIT, RANGE-1 CIRCLE-1(1)(2), AHMEDABAD BY THE CO-ORDINATE BENCH IN FAVOUR OF ASSESSEE. THE RELEVANT PORTION DEALING THE ISSUE IN SUCH JUDGMENT IS AS FO LLOWS: 28. WE HAVE HEARD BOTH THE PARTIES. MR. SOPARKAR I S VERY FAIR IN POINTING OUT AT THE OUTSET THAT THIS TRIBUNAL'S DECISION IN ASSTT. CIT V. LIVA HEALTHCARE LTD. [20161 161 1TD 63/73 TAXMANN.COM 171 (MUM. -TRIB.) UPHOLDING SUCH A DISALLOWANCE IN CASE OF PHARMACEUT ICAL COMPANIES OFFERING FREE SAMPLES TO DOCTOR POST INTR ODUCTION OF THE RELEVANT PRODUCT IN MARKET AFTER ESTABLISHING END USE; IS HIT BY SECTIO N 37(1) EXPLANATION. HE HOWEVER REFERS TO ANOTHER CO-ORDINATE BENCH DECISION IN MACLEODS PHAR MACEUTICALS LTD. V. ADDL. CIT [20161 161 ITD 291/74 TAXMANN.COM 250 (MUM. - TRIB.) HOLDI NG THAT THE ABOVE BOARD'S CIRCULAR - 14 - ITA NO.3524/AHD/2016 BANKERS CARDIOLOGY PVT.LTD. VS. DCIT ASST.YEAR 2012-13 DATED 01.08.2012 WOULD NOT HAVE ANY RETROSPECTIVE E FFECT SINCE NOT OPERATING IN ASSESSMENT YEARS 2010-11. HE FURTHER QUOTES ANOTHER CO-ORDINAT E BENCH DECISION IN DY. CITV. PEL PHARMA (P.) LTD. [20171 163 ITD 10/78 TAXMANN.COM 3 6 (MUM. - TRIB.) DISTINGUISHING THE ABOVE CASE LAW IN REVENUE'S FAVOUR WHILST DELETING AN IDENTICAL DISALLOWANCE ON THE GROUND THAT SUCH BUSINESS PROMOTION EXPENSES ARE ALLOWABLE AS BUSINESS EXPENDITURE NOT HIT U/S. 37(1) EXPLANATION. WE AFFORDED AMPLE REBUTTAL OPPOR TUNITY TO THE REVENUE. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO INDICATE ANY D ISTINGUISHING FEATURES THEREIN. WE FIND THAT THE ABOVE LATTER CO-ORDINATE BENCH HAS ELABORA TELY DISCUSSED ALL CASE LAWS, IMC REGULATIONS AS WELL AS BOARD'S CIRCULAR IN DECIDING THE ISSUE. WE THEREFORE ADOPT THE VERY REASONING HEREIN AS WELL TO DELETE THE IMPUGNED DIS ALLOWANCE. THE ASSESSEE SUCCEEDS IN ITS INSTANT SUBSTANTIVE GROUND. ITS APPEAL ITA NO.848/A HD/2016 IS PARTLY ACCEPTED. 21. FROM THE ABOVE JUDGMENTS IT APPEARS THAT THE CB DT CIRCULAR ISSUED ON 01.08.2012 WITHOUT ANY RETROSPECTIVE EFFECT NOT APP LICABLE TO THE INSTANT CASE OF THE ASSESSEE FOR AY 2012-13 NOR THE MCI GUIDELINES WHIC H WAS RELIED UPON BY THE REVENUE WHILE REJECTING THE CLAIM OF THE APPELLANT COMPANY HAS ANY MANNER OF APPLICATION. THE SEMINAR CONDUCTED IN ABROAD BY THE ASSESSEE COMPANY WITH THE FINANCIAL AID OF THE PHARMACEUTICALS COMPANY DOES NOT GIVE ANY SCOPE TO TREAT THE SAME FOR THE PURPOSE OTHER THAN BUSINESS OF THE ASSESSEE COMPANY SO FAR IT REL ATES TO THE MEDICAL PRACTITIONERS. TAKING INTO CONSIDERATION THE ENTIRE ASPECTS OF THE MATTER, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEES CLAIM TOWARDS TRAVELLIN G EXPENSES IS JUSTIFIED. BUT HAVING REGARD TO THE DISPUTED QUESTION OF FACTS RELATING T O THE TRAVELLING EXPENSES INCURRED TOWARDS THE PERSONS SPONSORED BY THE COMPANY OTHER THAN THE DOCTORS NEEDS TO BE VERIFIED IN ITS PROPER PERSPECTIVE WITH THE SUPPORT ING DOCUMENTS TO BE MADE AVAILABLE BY THE ASSESSEE TO THE LD. ASSESSING OFFICER. WE THER EFORE FIND IT PROPER FOR THE ENDS OF JUSTICE TO SET ASIDE THE ISSUE TO THE FILE OF LD. A SSESSING OFFICER TO VERIFY THE CLAIM OF THE COMPANY TOWARDS THE EXPENSES INCURRED UPON THE PERS ONS OTHER THAN THE DOCTORS AS INDICATED BY THE AUTHORITIES BELOW IN THE ORDER IMP UGNED BEFORE US. WE MAKE IT CLEAR THAT THE ASSESSEE WILL CO-OPERATE WITH THE LD. ASSE SSING OFFICER BY FURNISHING THE DETAILS OF THOSE PERSONS TO ASCERTAIN THE ACTUAL EXPENSES I NCURRED ON THE MEDICAL PRACTITIONERS WHICH ONLY REQUIRED TO BE ALLOWED AFTER BEING FULLY SATISFIED UPON VERIFICATION OF THE - 15 - ITA NO.3524/AHD/2016 BANKERS CARDIOLOGY PVT.LTD. VS. DCIT ASST.YEAR 2012-13 DETAILS TO BE FURNISHED BY THE ASSESSEE AT THE TIME OF ASSESSMENT. THE GROUND OF APPEAL PREFERRED BY THE ASSESSEE IS THUS PARTLY ALLOWED FO R STATISTICAL PURPOSES. 22. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 26 /10/2018 SD/- SD/- (AMARJIT SINGH) ( MS. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 26/ 10 /2018 .., . ../ T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-1, VADODARA 5. !'# , $ , / DR, ITAT, AHMEDABAD 6. #() *+ / GUARD FILE. / BY ORDER, ! //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 6.8.18/24.8.18(DICTATION-PAD 22+3+12PAGES ATTACHED AT THE END OF THIS APPEAL -FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 8.8.18/24.8.18/23.10.18/25.10.18 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.26.10.18 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 26.10.18 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER