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17. We have considered the submissions of both sides and perused the material available on record. During the assessment proceedings, from the perusal of the profit and loss account of the assessee, it was observed that the assessee has claimed an expenditure of Rs. 17.49 crore as sales incentive. Accordingly, the assessee was asked to furnish the details of the parties to whom sales incentives were paid during the year, along with TDS deducted ITAs No.6715, 6721, 6723, 7292 & 7293/Mum/2025 (A.Ys. 2018-19, 2020-21, 2021-22, 2022-23 & 2023-24 ) thereon. Further, the assessee was also asked to explain the nature of these payments. In response, the assessee submitted that it generated business leads from its collection centres, third-party service providers, aggregators, and online platforms in relation to its diagnostic testing services. The assessee submitted that these parties are paid a certain percentage of the revenue generated from such leads as commission and accounted as sales incentives in the books of account. On perusal of the details filed by the assessee, it was observed that the payments have been made to diagnostic centres and individuals, and not aggregators, online platforms or third-party service providers as submitted by the assessee. Further, no documentary evidence with respect to the individuals mentioned in the details was provided by the assessee. Accordingly, the assessee was asked to show cause as to why an amount of 10% of Rs. 17.49 crore should not be disallowed under the provisions of Explanation 1 to section 37(1) of the Act. In response, the assessee reiterated its earlier claim that the payments were made as sales incentives to its collection centres, third-party service providers, aggregators, and online platforms in relation to leads generated by the assessee's diagnostic testing services. It was submitted that, in the instant case, it does not provide any freebies and has engaged service providers, not medical practitioners, to meet business needs. Without prejudice to the above submissions, the assessee submitted that the MCI regulations apply to medical practitioners, and a corporate entity, as such, is not covered by these regulations.

23. We find that the Hon'ble Supreme Court in Apex Laboratories Pvt. Ltd. v. DCIT, reported in (2022) 442 ITR 1 (SC), held that gifting of freebies by pharmaceutical companies to medical practitioners is prohibited by law and, thus, the expenditure incurred in distribution of such freebies is not allowable as deduction in terms of Explanation 1 to section 37(1) of the Act.

24. From the perusal of the details of sales incentives paid by the assessee, forming part of the paper book from pages 97 to 179, we notice that the names of certain parties are prefixed by "Dr." During the hearing, the learned AR submitted that even though these parties are referred to as "Doctors", however, they are not medical practitioners and are pathological/collection centres to whom the assessee paid sales incentives to generate business leads for its diagnostic testing services. From the perusal of the aforesaid details, we find that the assessee has also provided the address and PAN details of these parties. However, neither the AO nor the learned CIT(A) has gone into the details of the activities conducted by these parties on behalf of the assessee. There is no dispute amongst the parties regarding the law settled by the Hon'ble Supreme Court in Apex Laboratories Pvt. Ltd. (supra). Therefore, in the light of the facts and circumstances of the present case, we deem it appropriate to restore this issue to the file of the jurisdictional AO for de novo adjudication after examination qua each and every party to whom ITAs No.6715, 6721, 6723, 7292 & 7293/Mum/2025 (A.Ys. 2018-19, 2020-21, 2021-22, 2022-23 & 2023-24 ) sales incentive was paid by the assessee. We also note that the assessee has not, even on a sample basis, filed any agreement with these parties for the payment of commission as a sales incentive. Since this issue has been restored to the file of the AO for consideration afresh, the AO may look into the agreements entered into by the assessee with these parties pursuant to which the sales incentive was paid. Accordingly, we direct the AO to decide this issue, as per law, after thorough examination of the details pertaining to payment of sales commission by the assessee qua each party. We further direct the assessee to cooperate in the complete adjudication of this issue and furnish all the details as may be sought by the AO. With these directions, the impugned order on this issue is set aside, and Grounds Nos. 4 and 5 raised in the Revenue's appeal are allowed for statistical purposes.