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The Tax PublishersITA No. 4826/Mum/2016
2019 TaxPub(DT) 8309 (Mum-Trib)INCOME TAX ACT, 1961
Section 37(1)
Medical Practitioners were not under any binding obligation after receiving brand reminder from assessee company bearing logo of assessee. This fact clearly revealed that distribution of articles by assessee was unconditional and did not go against public policy. Articles distributed were of nominal value and not capable of influencing decision of highly skilled Medical Practitioners. The expenditure incurred was thus akin to advertisement and sales promotion expenditure incurred in any other business and could not be disallowed for reasons assigned by AO.
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Business expenditure - Expenses on brand reminders and on purchase of medical books and journals provided to Health Care Professionals (HCPs) - AO alleging contravention of IMC guidelines -
Assessee-company engaged in trading and manufacuring of drugs, pharmaceuticals and consumer healthcare products claimed deduction of expenses incurred brand reminders and on purchase of medical books and journals provided to Health Care Professionals ('HCPs'). AO held that guidelines and regulations issued by Indian Medical Council state that such a conduct would be unethical and, therefore, deduction could be allowed.Held: Medical Practitioners were not under any binding obligation after receiving brand reminder from assessee company bearing logo of assessee. This fact clearly revealed that distribution of articles by assessee was unconditional and did not go against public policy. Articles distributed were of nominal value and not capable of influencing decision of highly skilled Medical Practitioners. The expenditure incurred was thus akin to advertisement and sales promotion expenditure incurred in any other business and could not be disallowed for reasons assigned by AO.
Applied:Dy. CIT v. PHL Pharma Pvt. Ltd. (2017) 49 CCH 124 (Mum) : 2017 TaxPub(DT) 192 (Mum-Trib). Supported by:Emcure Pharmacentical Ltd v. Dy. CIT in ITA No. 1532/Pun/2015 (Pune-Trib), Solvay Pharma India Ltd. [ITA No. 3585/Mum/2016] : 2018 TaxPub(DT) 234 (Mum-Trib)
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2010-11
INCOME TAX ACT, 1961
Section 143(3)
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