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29. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record and the judicial pronouncements relied upon by them. It is the claim of the assessee that the lower authorities misconceiving the facts and the settled position of law had wrongly disallowed the aforementioned expenses, which were incurred wholly and exclusively for the purpose of its business. The expenses incurred by the assessee comprised of viz. (i) Key Account Manager (KAM) Expenses; (ii) Customer Relation Manager (CRM) Expenses; and (iii) Gift Articles. The assessee has assailed the inadmissibility of the expenses u/s 37(1) of the I.T Act on the part of the lower authorities. It was submitted by the ld. A.R that the A.O/DRP had erred in most arbitrarily restricting the entitlement of the assessee towards claim of the aforementioned expenses to the extent of Rs.27,90,84,346/- i.e 50% of Rs.55,81,68,692/-. We find that the assessee has objected to the observations of the lower authorities, which had disallowed the said expenses for two reasons viz. (i) that the expenses claimed by the assessee were not verifiable; and (ii) that the expenses incurred by the assessee towards giving various freebies to doctors for promotion of its business was inadmissible under Sec. 37(1), ITA Nos.1754 & 1832/Mum/2015 Piramal Enterprise Limited (Formerly known as Piramal Healthcare Limited.

as incurring of such an expense was prohibited by law. In the backdrop of the objections raised by the ld. A.R before us, we find that the adverse inferences drawn by the lower authorities as regards the admissibility of the aforesaid expenses has been assailed by the assessee before us on multiple grounds viz. (i) that the Medical Council Regulations, 2002 would though apply to medical practitioners, however, the same were not applicable to the pharmaceutical companies; (ii) that as the CBDT Circular No. 5 of 2012, dated 01.08.2012 imposing prohibition on the medical practitioners and their professional associations from taking any gifts, travel facility, hospitality, cash or monetary grant from the pharmaceutical and allied healthcare sector industries was applicable prospectively, therefore, the same was not applicable in the case of the assessee for the year under consideration i.e A.Y. 2009-10; (iii) that in any case the MCD guidelines which came into effect from 10.12.2009 itself were not applicable in the year under consideration; (iv) that the circular issued by the CBDT cannot impose an obligation adverse to an assessee; and (v) that the samples, expenses incurred on conference etc. by the assessee were not in the nature of freebies.

2002, however as the same only regulates the code of conduct of the medical practitioners/doctors, therefore, in the absence of any prohibition on the pharmaceutical companies in incurring of such sales promotion expenses, it cannot be held to have incurred an expenditure for a purpose which is an offence or is prohibited by law. The Tribunal while concluding as hereinabove, had observed as under:

"20. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find that our indulgence in the cross appeals filed by the assessee and the revenue has been sought for adjudicating the allowability of the sales promotion expenses incurred by the assessee on the distribution of articles to the stockists, distributors, dealers, customers and doctors, in the backdrop of the CBDT Circular No. 5/2012, dated 01.08.2012 and the MCI regulations. We find that it is the case of the revenue that as per the CBDT Circular No. 5/2012, dated 01.08.2012 any expense incurred by a pharmaceutical or allied health sector industry in providing any "freebies" to medical practitioners or their professional associations in violation of the regulation issued by Medical Council of India which is a regulatory body constituted under the Medical Council Act, 1956, would be liable to be disallowed in the hands of such pharmaceutical or allied health sector industry or any other assessee which had provided such "freebies" and claimed the same as a deductible expense against its income in the accounts. 21. We have deliberated at length on the issue under consideration and after perusing the regulations issued by the Medical Council of India, find that the same lays down the code of conduct in respect of the doctors and other medical professionals registered with it, and are not applicable to the pharmaceuticals or allied health sector industries. Rather, a perusal of the provisions of the Indian Medical Council Act, 1956, reveals that the scope and ambit of statutory provisions relating to professional conduct of registered medical practitioners under the Indian Medical Council Act, 1956 is restricted only to the persons registered as medical practitioners with the State Medical Council and whose name are entered in the Indian Medical Register maintained under Sec. 21 of the said Act. We are of the considered view that the scheme of the Indian Medical Council Act, 1956 neither deals with nor provides for any conduct of any association/society and deals only with the conduct of individual registered medical practitioners. In the backdrop of the aforesaid facts, it emerges that the applicability of the MCI regulations would only cover individual medical practitioners and not the pharmaceutical companies or allied health sector industries. Interestingly, the scope of the applicability of the MCI regulations was looked into by the Hon‟ble High Court of Delhi in the case of Max Hospital, Pitampura Vs. Medical Council of India (CWP No. 1334/2013, dated 10.01.2014). In the aforementioned case the MCI had filed an „Affidavit‟ before the High Court, wherein it was deposed by the council that its jurisdiction is limited only to take action against the registered medical professionals under the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002, and it has no jurisdiction to pass any order affecting the rights/interest of the petitioner hospital. We are of the considered view that on the basis of the aforesaid deposition of MCI that its jurisdiction stands restricted to the ITA Nos.1754 & 1832/Mum/2015 Piramal Enterprise Limited (Formerly known as Piramal Healthcare Limited.

22. We shall now advert to the CBDT Circular No. 5/2012, dated 01.08.2012. We find that the aforesaid CBDT Circular reads as under:-

"Inadmissibility of expenses incurred in providing freebees to medical practitioner by pharmaceutical and allied health sector industry Circular No. 5/2012 [F.No. 225/142/2012-ITA.II], dated 1-8-2012 It has been brought to the notice of the Board that some pharmaceutical and allied health sector Industries are providing freebies (freebies) to medical practitioner and their professional associations in violation of the regulations issued by Medical Council of India (the „Council‟) which is a regulatory body constituted under the Medical Council Act, 1956 2. The council in exercise of its statutory powers amended the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 (the regulations) on 10-12-2009 imposing a prohibition on the medical practitioner and their professional associations from taking any Gift, ITA Nos.1754 & 1832/Mum/2015 Piramal Enterprise Limited (Formerly known as Piramal Healthcare Limited.