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2019 (1) TMI 1126 - AT - Income TaxApplication of Explanation 1 to Sec. 37(1) - allowability of sales promotion expenses - abnormal increase in expenditure - expenses were incurred on travel and hospitality of the Doctors and medical professionals - violation of MCI guidelines - Held that:- We hold that it is trite law that CBDT Circular which creates a tax burden or tax liability on an assessee cannot be reckoned with retrospective effect. The CBDT Circular could be made applicable only from assessment year 2013-14 onwards. Reliance in this regard is made on the decision of Hon’ble Supreme Court in the case of DCIT Vs. S.R.M.B Dairy Farming (2017 (11) TMI 1494 - SUPREME COURT). We also find that the lower authorities had not doubted the fact that the sales promotion expenditure were incurred wholly and exclusively for the purpose of business of the assessee. The only grievance of the Revenue seems to be that the said expenditure is hit by the provisions of Explanation 1 to 37(1) of the Act, which in our considered opinion, is not applicable in view of aforesaid discussions. In view of series of decisions relied upon hereinabove on the impugned issue, we hold that the sales promotion expenses incurred by the assessee in the total sum deserves to be allowed.
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