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2016 (2) TMI 263 - AT - Income TaxDisallowance of sales promotion expenses - AO disallowed by invoking Explanation to Section 37(1) and CBDT Circular dated 1-8-2012 - Held that:- As receiving of gifts by doctors was prohibited by MCI guidelines, giving of the same by manufacturer is not prohibited under any law for the time being in force. Giving small gifts bearing company logo to doctors does not tantamount to giving gifts to doctors but it is regarded as advertising expenses. As regards sponsoring doctors for conferences and extending hospitality, pharmaceuticals companies have been sponsoring practicing doctors to attend prestigious conferences so that they gather contemporary knowledge about management of certain illness/disease and learn about newer therapies. We found that the disallowance was made by the AO by relying on the CBDT Circular dated 01.08.2012 onwards. However, the Circular was not applicable because it was introduced w.e.f.01.08.2012. i.e. assessment year 2013-2014, whereas the relevant assessment year under consideration is 2010-2011 and 2011-2012. Accordingly, we do not find any merit in the disallowance - Decided in favour of assessee Addition on account of forfeiture of warrant application money - Held that:- As found that warrants were converted into shares, however, money contributions did not contribute these warrants into shares, therefore, their contributions were forfeited which was treated by assessee as capital receipts. The issue is squarely covered by the decision of Travencore Rubber & Tea Company Ltd. (2000 (3) TMI 5 - SUPREME Court). The case laws relied on by the AO are not applicable to the facts of the instant case, which has elaborately dealt by the CIT(A) in his order. Furthermore, tax effect in the appeal filed by the revenue, as per Circular No.21/2015, dated 10th December, 2015, is less than ₹ 10.00 lacs, therefore, the appeal of the revenue is not maintainable.- Decided in favour of assessee Disallowance u/s.14A r.w.rule 8D - Held that:- No merit for the disallowance so made u/s.14A, when there is no exempt income during the year under consideration.- Decided in favour of assessee
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