doctors were given the samples only thereafter. Therefore, the normal inference
would be that the samples are distributed also for promoting sales. Shri Dastur ... stock of medicine is not sample, but all the sample is medicine. Nobody says that samples are produced separately. They are part of the general
such free samples. The assessee submitted that the
assessee has purchased samples worth Rs. 126.75 lacs for its free
distribution. The assessee submitted copies ... field
staff for their necessary distribution to doctors . It was submitted that goods
purchased for distribution to Doctors as samples are manufactured as
"Physician
adopted by the assessee to distribute samples to
doctors/medical practitioners. It was submitted that the sample so
distributed to the doctors/medical practitioners ... such as product name,
doctor name, Quantity of samples given, Date of supply of free
samples distributed to Healthcare practitioners
loss account a sum of Rs.6,10,76,573/- as sample
distribution cost under the head "Marketing Development Cost".
The AO observed ... give these samples
to their customers who are the end users. Similarly, these
samples are given to the stockiest for free distribution which is
overseen
sample without any basis,
reasons, justification or any other allegation about the disposal of the physician
sample in any manner other than the distribution thereof ... allowing the cost of samples produced in respect of those samples
which would have expired had they been not distributed as alleged by the
assessing
made by the AO on account of
physician samples distributed at free of cost.
(2) The ld.CIT(A) has erred ... made by the A.O. on account of Physician Samples
distributed free of cost.
3. In this case, ld. A.O. disallowed the amount
that there is no evidence of actual distribution of samples. But accepted that samples distribution is a part of medicine trade. He allowed expenditure ... assessee has also submitted a sample of such report. In this report, quantities of free samples distribution by MRs is also given. It seems that
that the major
expenses incurred were on sales promotion, conveyance, travelling, sample distribution,
royalty & marketing. Regarding whether the assessee is a trading concern ... business, penetration in the market was
necessary and as such sample distribution and business promotion was the key
during the year. Sales had just begun
disallowing on adhoc basic 75%
of the expenditure incurred towards free samples distributed amounting to
Rs.118,503,996/- by treating it as non business ... distributed and the details of which are also placed at pages 806 to 1014 of the paper
book. He submitted that distribution of free samples
closing stock did include quantities and values of
samples, but since the samples were distributed free of cost,
these were reflected as part and parcel ... whom such free samples were
distributed, furnished only region wise samples distributed to
medical representatives, and no details of physicians/doctors
were given
