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| The Tax Publishers2019 TaxPub(DT) 1363 (Mum-Trib) INCOME TAX ACT, 1961
Section 37(1), Expln. 1
CBDT Circular No. 5/2012, dt. 1-8-2012 could be made applicable only from assessment year 2013 onwards. therefore, sales promotion expenditure incurred by pharmaceutical company were allowable during the year under consideration.
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Business expenditure - Sales promotion expenditure incurred by pharmaceutical company - Applicability of - CBDT Circular No. 5/2012, dt. 1-8-2012
Assessee company engaged in marketing and trading of consumer health and pharmaceuticals products, claimed deduction of expenses incurred by it towards travel and hospitality expenses of various doctors/health care professionals for attending various conferences incidental to promotion of products marketed by the assessee. AO relying on CBDT Circular No. 5/2012, dt. 1-8-2012 disallowed entire sales promotion expenditure.Held: It is trite law that CBDT Circular which creates a tax burden or tax liability on an assessee cannot be reckoned with retrospective effect. Thus, CBDT Circular No. 5/2012, dt. 1-8-2012 could be made applicable only from assessment year 2013-14 onwards. Therefore, no disallowance could be made during the year under consideration especially in view of the fact that sales promotion expenditure was incurred wholly and exclusively for the purpose of business of assessee.
Relied:Director of Income Tax, Circle 26 (1) New Delhi v. S.R.M.B. Dairy Farming (P) Ltd. (2018) 400 ITR 9 (SC) : 2017 TaxPub(DT) 5022 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2010-11
IN THE ITAT, MUMBAI BENCH
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