TMI Blog2018 (12) TMI 1876X X X X Extracts X X X X X X X X Extracts X X X X ..... ich he has examined. Furthermore, the ld. CIT is fully aware of the case law cited by the assessee before him wherein similar expenses were allowed by the ITAT. He has not followed the same holding that it has been appealed against in High Court. Just because the ITAT order has been appealed before High Court, it will not cease to have binding effect on the ld. CIT. It will always be considered to be a permissible view. Hence, if the A.O. adopts a legally permissible view the same cannot be the subject to revision u/s. 263 of the Act. While concluding, the ld. CIT has observed that the A.O. shall take into account the binding judicial precedence which may become available on the subject. In this connection, we note that in assessee's own case the ITAT [ 2018 (7) TMI 1883 - ITAT MUMBAI] has allowed the assessee's appeals and dismissed the Revenues appeals. The issue involved was the allowability of similar expenses. In this view of the matter, we find that admittedly the decision of tribunal is binding upon the A.O. Hence the order u/s. 263 of the Act by the ld. CIT will be of no consequence. A.O. has already made the necessary enquiries in this regard. Here it is a ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of Explanation 2(a) and (b) of section 263(1) of the Act. Accordingly, a show-cause notice dated 06.03.2017 was issued u/s. 263 of the Act to the assessee to grant the opportunity of being heard while proposing to revise the assessment order dated 06.01.2015 suitably for the aforesaid reasons. 5. Thereafter, he noted the assessee's response as under: (i) that the AO had called for and examined the 'Medical Conference Expenses' not only this year but in earlier years. (ii) that the MCI is not a regulatory authority of the assessee. Its jurisdiction is limited to medical professionals and has no jurisdiction over the assessee and the assessee is not bound by the regulations whatsoever passed by the MCI. (iii) that the Notification dated 10.12.2009 has the approval of the Central Government and there is no evidence that the said Notification received assent of the President of India. (iv) that the said Medical Conference Expenses are incurred 'wholly exclusively' for the purposes of business and are allowable u/s. 37 of the Act. (v) that the said expenses are not categorised as an 'offence' or which are 'prohibited by law' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l companies while treating patients. It has an ethical connotation. As per the assessee's own submission, these expenses are in the nature of (i) Registration fees for the doctors attending conferences (ii) Travelling expenses Air/Train etc, for attending conferences (iii) Stay charges for attending conferences (iv) Food, snacks, tea, coffee expenses during conferences (v) Expenses incurred in holding medical camp for detection and awareness of diseases and (vi) Gift articles. These expenses clearly fall under the MCI regulation dated 10.12.2009 which prohibits acceptance of gift, travel facility, hospitality, cash or monetary grants by a medical practitioner. As regards the quantum of expenses i.e. whether it is ₹ 31.18 crores or it is ₹ 19.26 crores as claimed by the assessee, the AO, shall examine the facts and decide the same as per law. 7. In view of the above facts and circumstances and after considering the submissions made by the assessee company, I am convinced that A.O. has committed the errors described above which are also prejudicial to the interest of revenue. Considering the same, in exercise of powers conferred u/s. 263 of the I.T. Act, I, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC) 2. 2009 (4) PLJR Page 417 (Pat) - Commissioner of Income-tax Vs. Mukul Kumar 3. 203 ITR 108 (Bom) - Commissioner of Income-tax vs. Gabriel India Limited 4. 270 ITR 157 (MP) 5. 276 ITR 13 (MP) 6. (2015) 372 ITR 310 (All) CIT v. Krishna Caobox (P) Ltd. 7. (2014) 367 ITR 377 (Raj.) CIT v. Deepak Real Estate Developers (I) P. Ltd. 8. (2012) 341 ITR 537 (Delhi) CIT v. Vikash Polymers 10. Considering the above, the ld. CIT observed as under: The assessee has contended that the notification issued by the MCI is in exercise of its executive powers and is not 'law'. In this regard, it is noticed that as per Article 13(3)(a) of the Constitution of India, law includes any Ordinance, order, bye law, rule, regulation, notification, custom or usages having in the territory of India the force of law. Further, as is evident from the notification itself that the notification has been issued by the Medical council of India in exercise of power conferred by Section 33 of Indian Medical Council Act, 1956 with previous sanction of the Central Government. Therefore, the notification certainly qualifies as 'law'. Explanation in to Section 37, declares that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bited under the aforesaid notification of Medical council of India was not in accordance with law. Moreover, it is observed from records that in subsequent assessment year i.e. AY 2014-15, such expenditure has been disallowed by the Assessing Officer. iv. The contention of the assessee is that the expenditure incurred is in the nature of sales promotion and is, thus, allowable u/s. 37 of the I.T. Act. However, it is observed from records that the assessee has separately claimed Product Advertisement Expenses' which were found by the Assessing Officer to be in the nature of expenses on Sales Promotion Articles and was disallowed in the assessment order. As already/discussed in preceding paras, the expenses were liable to disallowance being hit by the provisions of Explanation 1 to section 37 of the Act. 11. Thereafter, the ld. CIT distinguished the case laws relied upon by the assessee. Thereafter ld. CIT made the following observation in his concluding remarks: 6.8 The assessee has also referred to the decision of the Mumbai Bench of ITAT in the case of DCIT 8(2), Mumbai Vs. PHL Pharma (ITA No. 4605/Mum/2014) wherein the expenses on medical conference have been hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case. This non-verification which was required in the facts and circumstances of the case and allowance of the aforesaid amount of ₹ 23,18,11,343/- and consequent loss of revenue has rendered the assessment order erroneous in so far it is prejudicial to the interest of revenue. 8. In this regard, the judgment of the Hon'ble Supreme Court in the case of Malabar Industrial Co. Limited v. CIT [2000] 243 ITR 83 (SC) may be referred to wherein the Hon'ble Court held ... The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. The phrase prejudicial to the interests of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. It was further held by the Apex Court that the assessment orders was erroneous if the assessing officer passed the assessment order without applying his mind to the case in all perspective. In view of the aforesaid judgment of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing officer has rightly allowed the same. In this regard, the ld. Counsel of the assessee placed reliance upon following case laws: 1. M/s. Aristo Pharmaceuticals Pvt. Ltd. (in ITA No. 6680/M/012 others vide order dated 26.07.2018); 2. M/s. Solvay Pharma India Ltd. now merged with Abbott India Ltd. (in ITA No. 3585/Mum/2016 vide order dated 11.01.2018); 3. D.D. Pharmaceutical (P.) Ltd. vs. Asst. CIT (in ITA No. 772/JP/2014 vide order dated 12.12.2017); 4. Asst. CIT vs. M/s. Geno Pharmaceuticals Ltd. (in ITA No. 12/PNJ/2014 vide order dated 30.05.2014); 5. Ensure Pharmaceuticals Ltd. vs. DCIT (in ITA No. 1532/Pun/2015 vide order dated 29.01.2018) 14. Per Contra, the ld. Departmental Representative (ld. DR for short) relied upon the order's of the ld. CIT. He further relied upon the following case laws: 1. Bisakha Sales (P.) Ltd. vs. CIT [2014] 52 taxmann.com 205 (Kol - Trib); 2. CIT vs. Abad Constructions (P.) Ltd. [2014] 44 taxmann.com 319 (Kerala) 15. Upon careful consideration, we note that the CBDT circular, the medical counsel of India guideline which dealt with disallowance of freebies to doctors have been duly considered by the A.O. The A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be the subject to revision u/s. 263 of the Act. 17. Furthermore while concluding, the ld. CIT has observed that the A.O. shall take into account the binding judicial precedence which may become available on the subject. In this connection, we note that in assessee's own case the ITAT in ITA Nos. 5479 5747/Mum/2015 and others for A.Y. 2012 - 13 and others vide order dated 26.07.2018 has allowed the assessee's appeals and dismissed the Revenues appeals. The issue involved was the allowability of similar expenses. In this view of the matter, we find that admittedly the decision of tribunal is binding upon the A.O. Hence the order u/s. 263 of the Act by the ld. CIT will be of no consequence. Further, we note that the A.O. has already made the necessary enquiries in this regard. Here it is a case that the A.O. has made some enquiry and the ld. CIT is not satisfied and he wants another enquiry to be done. This direction u/s. 263 is not sustainable legally. This proposition draws support from the decision of the Hon'ble jurisdictional High Court in the case of CIT vs. Gabriel India Ltd. 203 ITR 108 (Bom-HC). 18. As regards the case law relied by the ld. Departmental ..... 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