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2021 (9) TMI 1205 - AT - Income TaxDisallowance out of Business and Promotion expenses - disallowing payments made towards conferences and promotion of products under the head Business and Promotion expenses u/s 37 - Scope of MCI regulation - as per revenue expenses incurred by the assessee were in violation of the CBDT Circular No. 5/2012, dated 01.08.2012 which was based on the notification of the Medical Council of India (MCI) - expenses wholly and exclusively incurred by a pharmaceutical company or a health sector industry - HELD THAT:- Enlargement of the scope of MCI regulation to the pharmaceutical companies or other health sector industry by the CBDT is de hors any enabling provision either under the Income Tax Act or under the Indian Medical Council Regulations. In our considered view, though the CBDT can tone down the rigours of law in order to ensure a fair enforcement of the provisions by issuing circulars for clarifying the statutory provisions, however, it is divested of its powers to create a new impairment adverse to an assessee, or to a class of assesses, without any sanction or authority of law. We find that the aspect that the CBDT is divested of its powers to enlarge the scope of MCI regulation by extending the same to pharmaceutical companies without any enabling provision either under the Income tax Act or the Indian Medical Regulations was also deliberated upon by the Tribunal in the case of Aristo Pharmaceuticals Pvt. ltd. Vs. ACIT . [2018 (7) TMI 1883 - ITAT MUMBAI]. The expenditure incurred by the assessee towards, Bangalore Orthopaedic Society – Conference for practical use of products and Payments made towards travelling expense of doctors for attending the workshops organized at France a/w the expenditure incurred towards their stay, honorarium fees would not be hit by the “Explanation” to Sec. 37 - A.O was not justified in disallowing the aforesaid expenses that were incurred by the assessee wholly and exclusively in the normal course of its business by bringing the same within the realm of the ‘Explanation’ to Sec. 37(1) - Decided in favour of assessee.
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