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2.First ground of appeal is about disallowance of advertisement and publicity expenses, amounting to Rs.1.01 crores.During the assessment proceedings,the AO found that the assessee had incurred expenses of Rs.1,01,62,156/-on account of advertisement and publicity. It submitted a list consisting the vendor name, amount, description and details of recipients in this regard.The AO observed that the items were freebies which were prohibited by the Govt. of India.Vide his order sheet noting,dated 19/3/2013,he asked the assessee to showcause as to why the expenditure related to healthcare professionals should not be disallowed as per Circular No. 5/2012 and Gazette notification issued regarding code of conduct for doctors and professional association of doctors in their relationship with pharmaceutical allied health sector industries.After considering the submission of the assessee,the AO held that all the expenses incurred by the assessee were not allowable. He allowed expenses incurred towards employees.Finally, a disallowance of Rs.1,01,46,962/- was made.

2.1.Aggrieved by the order of the AO the assessee preferred an appeal before the First Appellate Authority (FAA) and made detailed submissions and relied on certain case laws.After considering available material,he held that the assessee had incurred certain 2880/Mum/16.Bayer.

expenses in the form of gift and freebies distribution to the doctors/medical practitioners, that same were not medicine samples which could add to the knowledge of doctors and professionals towards discharging their duty and responsibility to the patients by enhanced knowledge and information, that the assessee had not disputed the finding of the AO that expenses were not in the nature of freebies.He referred to the provisions of section 37(2) wherein certain caps/limits were fixed with regard to nature of entertainment expenses incurred by the assessee in the earlier AY.s and stated that the expenses were in the nature of entertainment expenditure .He further held that Act did not allow freebies and gifts u/s. 37(1) of the Act, that Medical Association of India vide its notification dated 10/12/2009 had prohibited such incentives/gifts/freebies to be given by the corporate houses/ manufacturing concerns to the medical practitioners. He also referred to Explanation - 1 to section 37(1) of the Act and stated that Explanation was inserted by Finance Act 2015, that same was not prospective in nature. Finally he upheld the disallowance made by the AO.

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2.3.The Departmental Representative (DR) supported the order of Departmental Authorities and relied upon the case of LIVA Healthcare Ltd.(161ITD63).In his rejoinder,the AR stated that the Tribunal had considered the case of Liva Healthcared Ltd.,while deciding the appeal in the case of Solvay Pharma India Ltd.

2.4.We have heard the rival submissions and perused the material before us.We find that the assessee had incurred expenditure of more than Rs.1 crore towards advertisement and publicity,that the AO had observed that it had gifted freebies to the medical practitioners, that the departmental authorities were of the view that expenditure incurred by the assessee in violation of MCI Guidelines was not allowable.

in its clarification has enlarged the scope and applicability of 'Indian Medical Council Regulation 2002' by making it applicable to the pharmaceutical companies or allied health care sector industries. Such an enlargement of scope of MCI regulation to the pharmaceutical companies by the CBDT is without any enabling provisions either under the provisions of Income Tax Law or by any provisions under the Indian Medical Council Regulations. The CBDT cannot provide casus omissus to a statute or notification or any regulation which has not been expressly provided therein. The CBDT can tone down the rigours of law and ensure a fair enforcement of the provisions by issuing circulars and by clarifying the statutory provisions. CBDT circulars act like 'contemporanea expositio' in interpreting the statutory provisions and to ascertain the true meaning enunciated at the time when statute was enacted. However the CBDT in its power cannot create a new impairment adverse to an assessee or to a class of assessee without any sanction of law. The circular issued by the CBDT must confirm to tax laws and for purpose of giving administrative relief or for clarifying the provisions of law and cannot impose a burden on the assessee, leave alone creating a new burden by enlarging the scope of a different regulation issued under a different act so as to impose any kind of hardship or liability to the assessee. In any case, it is trite law that the CBDT circular which creates a burden or liability or imposes a new kind of imparity, same cannot be reckoned retrospectively. The beneficial circular may apply retrospectively but a circular imposing a burden has to be applied prospectively only. Here in this case the CBDT has enlarged the scope of 'Indian Medical Council Regulation, 2002' and made it applicable for the pharmaceutical companies. Therefore, such a CBDT circular cannot be reckoned to have retrospective effect. The same CBDT circular had come up for consideration before the co-ordinate Bench of the ITAT, Mumbai Bench in the case of Syncom Formulations (I) Ltd. (in ITA Nos. 6429 & 6428/Mum/2012 for A.Ys. 2010-11 and 2011-12, vide order dated 23.12.2015), wherein Tribunal held that CBDT circular would not be not be applicable in the A.Ys. 2010-11 and 2011-12 as it was introduced w.e.f. 1.8.2012. 10.From the perusal of the nature of expenditure incurred by the assessee, it is seen that under the head "Customer Relationship Management", the assessee arranges national level seminar and discussion panels of eminent doctors and inviting of other doctors to participate in the seminars on a topic related to therapeutic area. It arranges lectures and sponsors knowledge upgrade course which helps pharmaceutical companies to make aware of the products and medicines manufactured and launched by it. Under Key Account Management, the assessee makes endeavour to create awareness amongst certain class of key doctors about the products of the assessee and the new developments taking place in the area of medicine and providing correct diagnosis and treatment of the patients. The said activities by the assessee are to make the doctors aware of its products and research work carried out by it for bringing the medicine in the market and its results are based on several levels of tests and approvals. Unless the pharmaceutical companies make aware of such kind of products to key doctors or medical practitioners, then only it can successfully launch its products/medicines. This kind of expenditure is definitely in the nature of sales and business promotion, which has to be allowed. Coming to the gift articles and free samples of medicines, it is seen that the assessee gives various kind of articles like, diaries, pen sets, calendars, paper weights, injection boxes etc. embossed with bold logo of its brand name and the product name so that the doctors remembers the brand of the assessee and also the name of the medicine. All the gift articles, as pointed out by the assessee before the authorities below and also before us are very cheap and low cast articles which bears the name of assessee and it is purely for the promotion of its product, brand reminder, etc. These articles cannot be reckoned as freebies given to the doctors. Even the free sample of medicine is only to prove the efficacy and to establish the trust of the doctors on the quality of the drugs. This again cannot be reckoned as freebies given to the doctors but for promotion of its products. The pharmaceutical company, which is engaged in manufacturing and marketing of pharmaceutical products, can promote its sale and brand only by arranging seminars, conferences and thereby creating awareness amongst doctors about the new research in the medical field and therapeutic areas, etc. Every day there are new developments taking place around the world in the area of medicine and therapeutic, hence in order to provide correct diagnosis and treatment of the patients, it is imperative that the doctors should keep themselves updated with the latest developments in the medicine and the main object of such conferences and seminars is to update the doctors of the latest developments, 2880/Mum/16.Bayer.