2013 (7) TMI 387 - HIMACHAL PRADESH HIGH COURT

Deduction u/s 37(1) - Distributing free articles / samples to doctors - Held that:- The claim of any expense incurred in providing the freebees in violation of the provisions of the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002, shall be inadmissible under section 37(1) of the Income-tax Act being an expense prohibited by the law - 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 circular is also the same - paragraph 4 of the circular itself clarifies that the value of the freebies enjoyed by the medical practitioner is also taxable as business income or income from other sources- 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 – appeal decided against assesse.