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Vasant Vashrambhai Sapovadia vs. ACIT Asst.Year - 2010-11 ii. The CBDT in its circular No. 5/2012(F.No. 225/142/2012-ITA.III) dated 1 August 2012 has directed to treat the benefit/freebies enjoyed by the medical practitioner to be treated as income from other sources in the hands of such medical practitioner.

There is no dispute that the gifts, freebies and any other benefit to the doctors are prohibited as per explanation to section 37 of the Act. Similarly, such gifts and freebies to the doctors shall be treated as their income as per the circular bearing Vasant Vashrambhai Sapovadia vs. ACIT Asst.Year - 2010-11 number 5/2012 (F.No.225/142/2012-ITA.II) dated 1st August 2012 issued by the CBDT which prohibits such gifts of the doctors. According to the circular, the deduction to the pharmaceutical company in respect of such expenses will not be available. The Hon'ble Himachal Pradesh High Court also upheld the validity of the circular in the case of confederation of India pharmaceuticals Industry (SSI) Vs. CBDT reported in 353 ITR 388 wherein it was held as under:

"Shri Vishal Mohan, Advocate, on behalf of the petitioner contends that the circular goes beyond the section itself. We are not in agreement with this submission. The explanation to Section 37(1) makes it clear that any expenditure incurred by an assessee for any purpose which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession. The sum and substance of the circulars also the same. In case the assessing authorities are not properly understanding the circular then the remedy lies for each individual assessee to file appeals under the Income-tax Act but the circular which is totally in line with Section 37(1) cannot be said to be illegal. In fact paragraph 4 of the circular quoted hereinabove itself clarifies that the value of the freebies enjoyed by the medical practitioner is also taxable as business income or income from other sources depending on the facts of each case. Therefore, if the assessee satisfies the assessing authority that the expenditure is not in violation of the regulations framed by the medical council then it may legitimately claim a deduction, but it is for the assessee to satisfy the assessing officer that the expense is not in violation of the Medical Council Regulations referred to above."

From the above, it is clear that the provisions as specified in the CBDT circular cannot be applied to the case on hand. Therefore such freebies cannot be treated as income in the hands of the assessee for the year under consideration.

However, before parting we reiterate the fact that the assessee has not produced any documentary evidence suggesting that the expenses on the tour to Thailand was sponsored by the Ajanta Pharma. As such the assessee was under the obligation to furnish the details of the expenses such as travelling expenses, accommodation expenses, food expenses and other expenses if any to justify his stand. In our considered view, simply furnishing the quotation from the travel agent will not absolve the assessee from furnishing the necessary documents in support of the expenses incurred by him. We are also conscious to the fact that in the instant case the AO has estimated the total expenses incurred on the visit to Thailand but the AO had to resort to such estimation as the assessee has not filed the necessary details. Thus in the absence of sufficient documentary evidences, we do not find any infirmity in the order of the learned CIT (A).