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Rs. 8,99,16,637/-. In the backdrop of the aforesaid facts the CIT(A) concluded that the expenditure incurred by the assessee on purchase of sales promotion articles costing upto Rs. 750/- per article were to be P a g e | 18 AYs. 2005-06, 2009-10, 2011-12 & 2012-13 M/s Aristo Phamaceuticals Pvt. Ltd. Vs. Asst. CIT-2(1) considered to have been incurred wholly and exclusively by the assessee for its business purposes. In respect of the expenditure incurred by the assessee on sales promotion articles costing more than Rs. 750/- per article, the CIT(A) was of the view that the same were distributed predominantly to doctors and medical professionals in addition to stockists, chemists, distributors and customers. The CIT(A) was further of the view that the sales promotion articles costing less than Rs. 750/- per article were primarily distributed by the assessee to stockists, chemists, distributors and customers. It was further observed by the CIT(A) that out of the sales promotion articles exceeding a cost of Rs. 750/- per article, the same, inter alia, included an item namely glucometers purchased along with glucostrips by the assessee during the year for Rs. 5,15,995/-. The said glucometers alongwith the glucostrips were given by the assessee to its field staff, with a direction to hold diabetes detection camps in respective head quarters every month for promoting the anti-diabetic medicine sold by the assessee company. It was further noticed by the CIT(A) that BP instruments, clocks and watches, tracksuits etc. were given by the assessee to the doctors, while for some of the BP instruments were kept at the companies branches for using them in health camps. The CIT(A) deliberating on the nature of the sales promotion articles, observed that the same comprised of tracksuits, watches/clocks, electrical kettles, stainless steel utensil sets etc. which were distributed by the assessee through its field staff to the stockists, distributors and doctors. However, the assessee despite specific directions by the CIT(A) to place on record material evidences and documents in respect of sales promotion articles worth more than Rs. 750/- per article, failed to furnish the same. In the backdrop of the aforesaid facts the CIT(A) concluded that as the expenditure of Rs. 8,99,16,637/- incurred by the assessee on sales promotion articles costing less than Rs. 750/- per article could safely be related to the articles which were distributed by the assessee to its distributors, stockists, dealers and customers with the purpose of promoting its goodwill and enhancing the business interest, thus the same being an expenditure incurred by the assessee wholly and exclusively for the P a g e | 19 AYs. 2005-06, 2009-10, 2011-12 & 2012-13 M/s Aristo Phamaceuticals Pvt. Ltd. Vs. Asst. CIT-2(1) purpose of its business was allowable as an expenditure in its hands. On the basis of his aforesaid observations the CIT(A) deleted the disallowance of the sales promotion expenses of Rs. 8,99,16,637/-. Still further, the CIT(A) was of the view that the sales promotion articles comprising of costly articles worth more than Rs. 750/- per article were primarily distributed by the assessee as "freebies" to the doctors and medical professionals. The CIT(A) observed that out of the sales promotion articles of a cost of more than Rs. 750/- per article aggregating to an amount of Rs. 71,65,680/-, an amount of Rs. 5,15,995/- pertained to the purchase of glucometers along with glucostrips which were used by the field staff for holding diabetes detection camps. As regards the balance expenditure of Rs. 66,49,685/- [Rs. 71,65,680/- (-) Rs. 5,15,995/-] the CIT(A) was of the view that the same being costly articles would have been distributed as "freebies" by the assessee to the doctors and medical professionals. The CIT(A) observed that such distribution of "freebies" to the doctors and professionals by the assessee company was in violation of the CBDT Circular No. 5/2012 issued vide F.No. 225/142/2012-ITA.II, dated 01.08.2012 and also against the regulation issued by the Medical Council of India, which was a regulatory body constituted under the Medical Council Act, 1956. In the backdrop of his aforesaid observations the CIT(A) concluded that as the aforesaid amount of Rs. 66,49,685/- was incurred by the assessee for a purpose which was prohibited by the law, thus the same was not allowable as per the Explanation to Sec. 37(1) of the Act. On the basis of his aforesaid deliberations the CIT(A) upheld the disallowance of the sales promotion expenses to the extent of Rs. 66,49,685/-.

19. The assessee being aggrieved with the order of the CIT(A) to the extent he had sustained the disallowance of sales promotion expenses of Rs. 66,49,685/-, has carried the matter in appeal before us. The revenue on the other hand has assailed before us the deletion of the disallowance of the sales promotion expenses of Rs.9,04,32,632/- by the CIT(A). The Ld. A.R taking us through the observations of the lower authorities submitted that P a g e | 20 AYs. 2005-06, 2009-10, 2011-12 & 2012-13 M/s Aristo Phamaceuticals Pvt. Ltd. Vs. Asst. CIT-2(1) the CIT(A) had disallowed the expenditure incurred by the assessee on sales promotion articles of a cost exceeding Rs. 750/- per article, for the reason that the same having been distributed as „freebies" to doctors and medical professionals was in violation of the CBDT Circular No. 5/2012, dated 01.08.2012 and also against the regulation issued by the MCI, a regulatory body constituted under the Medical Council Act, 1956. The Ld. A.R taking us through the observations of the CIT(A) submitted that he had observed that the genuineness of the expenditure incurred by the assessee on sales promotion expenses of Rs. 9,70,82,317/- was not disputed by the revenue. The Ld. A.R in support of his contention that the allowability of the sales promotion expenses incurred by the assessee by distribution of articles to the stockists, distributors, dealers, customers and doctors was not covered by the CBDT Circular No. 5/2012, dated 01.08.2012 or by the MCI regulations, relied on the orders passed by the coordinate benches of the Tribunal viz. (i) Simcon Formulations (I) Ltd. Vs. DCIT-8(3), Mumbai (ITA No. 6429/Mum/2012, dated 23.12.2015); and (ii) DCIT-8(2), Mumbai Vs. PHL Pharma P. Ltd. (ITA No. 4605/Mum/2014, dated 12.01.2017). The Ld. A.R taking support of the aforesaid judicial pronouncements submitted that even if the sales promotion articles distributed by the assessee were to be held as "freebies", the same still would not be hit by the CBDT Circular No. 5/2012, dated 01.08.2012, as the same was not available during the year under consideration, viz. A.Y. 2011-12. It was averred by the Ld. A.R that the aforesaid CBDT Circular No. 5/2012, dated 01.08.2012 would only be applicable prospectively. It was further submitted by the Ld. A.R that the MCI regulations though were binding on the doctors or the medical professionals registered with the Medical Council of India, however the same would not be applicable to the assessee which was a pharmaceutical company. The Ld. A.R in order to drive home his contention that even distribution of "freebies" by a pharmaceutical company being an expenditure incurred wholly and exclusively for the purpose of its business, thus could not be disallowed, relied on the orders of the coordinate benches of the Tribunal viz. (i) M/s Solvay Pharma India Ltd. Vs. Pr.CIT, Mumbai (ITA No. P a g e | 21 AYs. 2005-06, 2009-10, 2011-12 & 2012-13 M/s Aristo Phamaceuticals Pvt. Ltd. Vs. Asst. CIT-2(1) 3585/Mum/2016, dated 11.01.2018); and (ii) Emcure Pharmaceuticals Ltd., Pune Vs. DCIT, Central Circle-2(1), Pune (ITA No. 1532/Pun/2015, dated 29.01.2018). Per contra, the Ld. D.R relied on the order passed by the A.O. It was submitted by the Ld. D.R that as the expenditure incurred by the assessee on distribution of articles was clearly in violation of the CBDT Circular No. 5/2012, dated 01.08.2012 as well as against the MCI guidelines, thus the same being in the nature of an expenditure for a purpose which was prohibited under law, had rightly been disallowed in totality by the A.O. It was further averred by the Ld. D.R that the CIT(A) had without any basis adopted a cut off amount of Rs. 750/- while partly sustaining the disallowance of the sales promotion expenses. The Ld. D.R rebutting the contention of the assessee that no such disallowance was made in the preceding years, submitted that as each and every year is an independent year, thus the same cannot form a basis for determining the allowability of the sales promotion expenses during the year under consideration. The Ld. D.R in order to buttress his contention that the sales promotion expenses incurred by the assessee were not allowable as an expenditure, relied on the judgment of the Hon‟ble High Court of Punjab & Haryana in the case of CIT Vs. Kap Scan and Diagnostic Centre (P.) Ltd. (2012) 344 ITR 476 (P&H). The Ld. A.R further in support of his contention that the aforesaid expenses incurred by the assessee by way of distribution of "freebies" were not allowable in the backdrop of the CBDT Circular No. 5/2012, dated 01.08.2012 and the MCI guidelines, relied on certain judicial pronouncements viz. (i) DCIT, Circle-13(1), New Delhi Vs. Ochoa Laboratories Ltd., Noida (ITA No. 4114/Del/2009, dated 25.08.2017); (ii) ACIT, Circle-6(3), Mumbai Vs. Liva Healthcare Ltd., Mumbai (ITA No. 904/Mum/2013, dated 12.09.2016); and (iii) Confederation of Indian Pharmaceutical Industry (SSI) Vs. The Central Board of Direct Taxes (CWP No. 10793 of 2012, dated 26.12.2012)(HP). The Ld. D.R in the backdrop of his aforesaid contentions submitted that as the CIT(A) had without any basis restricted the disallowance of the sales promotion expenses only in respect of the articles of a cost of more than Rs. 750/-, thus his order may P a g e | 22 AYs. 2005-06, 2009-10, 2011-12 & 2012-13 M/s Aristo Phamaceuticals Pvt. Ltd. Vs. Asst. CIT-2(1) be set aside and that of the A.O be restored. The Ld. A.R in his rejoinder submitted that the judgment of the Hon‟ble High Court of Himachal Pradesh in the case of Confederation of Indian Pharmaceutical Industry (SSI) Vs. The Central Board of Direct Taxes (CWP No. 10793 of 2012, dated 26.12.2012)(HP) was considered by the ITAT, Mumbai Bench "C", Mumbai in the case of DCIT-8(2), Mumbai Vs. PHL Pharma (P.) Ltd (2017) 49 CCH 124 (Mum). It was further submitted by the Ld. A.R that the Tribunal after considering the aforesaid judgment had observed that as held by the High Court, if the assessee was able to establish that the MCI regulation was not applicable to the assessee, then the same could not be blindly applied in its case. The Ld. A.R further referring to the reliance placed by the revenue on the judgment of the Hon‟ble High Court of Punjab & Haryana in the case of CIT Vs. Kap Scan and Diagnostic Centre (P.) Ltd. (2012) 344 ITR 476 (P&H), submitted that the said case was rendered in context of allowability of commission which was paid to the private doctors for referring the patients for diagnosis/scanning to the assessee company which was running a scanning and a diagnostic centre. The Ld. A.R submitted that the said judgment was also considered by the Tribunal while passing the order in the case of M/s PHL Pharma (P) Ltd. (supra). The Ld. A.R further averred that the order passed by the coordinate bench of the Tribunal in the case of ACIT, Circle-6(3), Mumbai Vs. Liva Healthcare Ltd., Mumbai (ITA No. 904/Mum/2013, dated 12.09.2016) was also considered by the Tribunal while adjudicating the case of M/s PHL Pharma (P) Ltd. (supra). It was submitted by the Ld. A.R that unlike the case of the present assessee, in the aforementioned case the expenses were incurred by the assessee for creating good relations with the doctors in lieu of expected favours from them for recommending to the patients the pharmaceuticals products dealt with by the company. As regards the reliance placed by the Ld. D.R on the order passed by the ITAT, Delhi in the case of M/s Ochoa Laboratories Ltd. (supra), it was the contention of the Ld. A.R that as the same pertained to the allowability of conference expenses which were incurred by the assessee, P a g e | 23 AYs. 2005-06, 2009-10, 2011-12 & 2012-13 M/s Aristo Phamaceuticals Pvt. Ltd. Vs. Asst. CIT-2(1) thus the same being distinguishable on facts would not assist the case of the revenue.

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, which is beneficial to the doctors in treating the patients as well as the P a g e | 39 AYs. 2005-06, 2009-10, 2011-12 & 2012-13 M/s Aristo Phamaceuticals Pvt. Ltd. Vs. Asst. CIT-2(1) pharmaceutical companies. Further as pointed out and concluded by the learned CIT(A) there is no violation by the assessee in so far as giving any kind of freebies to the medical practitioners. Thus, such kind of expenditures by a pharmaceutical companies are purely for business purpose which has to be allowed as business expenditure and is not impaired by EXPLANATION 1 to section 37(1).

31. Briefly stated, the assessee company had e-filed its return of income for A.Y. 2012-13 on 21.09.2012, declaring a total income of Rs. 270,68,80,787/-. The case of the assessee was thereafter taken up for P a g e | 46 AYs. 2005-06, 2009-10, 2011-12 & 2012-13 M/s Aristo Phamaceuticals Pvt. Ltd. Vs. Asst. CIT-2(1) scrutiny assessment under Sec. 143(2) of the Act. The A.O inter alia carrying out a disallowance of Rs. 11,37,45,179/- of sales promotion expenses assessed the income of the assessee company under Sec. 143(3) at Rs. 282,06,25,970/-. The book profit of the assessee under Sec. 115JB was computed by the A.O at Rs. 365,71,93,685/-. The A.O while framing the assessment had disallowed the entire amount of sales promotion expenses of Rs. 11,37,45,179/- for the reason viz. (i) the Medical Council of India (MCI) had imposed prohibition on medical practitioners from accepting gifts, travel facilities, hospitalities, cash or monetary grants (known as "freebies") from pharmaceutical and allied health care sector industry; and (ii) the CBDT circular No. 5/2012 issued vide F.No. 225/142/2012-ITA.II, dated 01.08.2012 had clarified that such "freebies" shall be inadmissible under Sec. 37(1) of the Act, being an expense prohibited by the law. On the basis of the aforesaid deliberations the A.O being of the view that the expenditure incurred by the assessee on distribution of "freebies" was inadmissible as per the Explanation to Sec. 37(1) of the Act, thus disallowed the entire amount of sales promotion expenses of Rs. 11,37,45,179/- debited by the assessee under the said head of expenditure.