TMI Blog2019 (6) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... of certain expenditure with supporting documents, it cannot be simply denied / rejected by the revenue merely on the ground of propriety, which action would lead to, travelling beyond the brief and stepping into the shoes of the assessee by the revenue. We therefore hold that the expenditure incurred by the assessee towards sales promotion, advertisement and publicity is an allowable expenditure. The assessee had only distributed the DVD players, silver coins, calenders and diaries to Tablets India Ltd which was marketing the products of the assessee. There was absolutely no distribution of gifts made by assessee to any medical practitioners and hence the applicability of CBDT Circular No. 5/2012 itself deserves to be rejected. Circular issued by the CBDT cannot enlarge the scope of a different regulation issued under a different act so as to impose any kind of hardship or liability to the assessee. - Decided in favour of assessee. Claim of deduction u/s 80IC - whether disallowance of aforesaid expenditure would correspondingly go to increase the claim of deduction u/s 80IC ? - HELD THAT:- The issue of whether deduction u/s.80IC of the Act should be computed on the profits as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .T.A. No. 2793/CHNY/2017, C.O. No. 14/Chny/2018, I.T.A. No. 2755/CHNY/2018 - - - Dated:- 7-6-2019 - Shri M. Balaganesh, Accountant Member And Shri Duvvuru RL Reddy, Judicial Member For the Assessee : Shri T. Banusekar, CA For the Revenue : Shri R.V. Aroon Prasad, JCIT ORDER PER M. BALAGANESH, ACCOUNTANT MEMBER: The appeal of the Revenue, the cross objection of the assessee and the cross appeal of the assessee are directed against the order of the Ld. Commissioner of Income Tax (Appeals)-6, Chennai vide proceedings in ITA Nos. 137/CIT(A)-6/2015-16 dated 14.09.2017 for the assessment year 2012-13 against the order of assessment passed by the ACIT(OSD), Corporate Circle-2, Chennai (herein after referred to as Ld. AO) u/s. 143(3) of the Income Tax Act,1961 (herein after referred to as the Act). As the issues involved in all these appeals, cross objection are common in nature, the same are taken up together and disposed off by this common order for the sake of convenience. 2. Let us take up the assessee appeal for Asst Year 2012-13 in ITA No. 2755/Chny/2017 first . The first issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sman and not from the point of the revenue. The ld AO cannot step into the shoes of the assessee to decide whether the expenditure is required to be incurred by the assessee or not. b) The ld AR stated that the CBDT Circular No.5 / 2012 which the ld AO relied on to hold the expenditure incurred by the assessee is an offence is dated 01.08.2012 and hence the same would not be applicable to the impugned assessment year i.e. AY 2012-13. In support of this proposition, he relied on the co-ordinate bench decision of Mumbai Tribunal in the case of Macleods Pharmaceuticals Ltd V. Additional CIT reported in 161 ITD 291 and Syncom Formulations (I) Ltd V. DCIT in ITA No.6429 / Mum / 2012, wherein it has been held that the Circular was introduced w.e.f. 01.08.2012 and hence effective from assessment year 2013-14 onwards. c) The ld AR also stated that the assessee company had not distributed the freebies namely DVD players and silver coins to any medical practitioner but only to Tablets (India) Ltd which is marketing the assessee s products and hence the said expenditure would not be covered by Circular No.5 / 2012 of the CBDT. d) The ld AR by placi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the revenue had not doubted the genuineness of the incurring of such expenditure. We find that the only grievance of the revenue is that the assessee need not have incurred that expenditure (i.e getting into the propriety of a transaction) and further the said expenditure is hit by the CBDT Circular No.5 / 2012. It is well settled that the revenue cannot step into the shoes of the assessee to decide whether the expenditure is required to be incurred by the assessee or not where the genuineness of the same is not questioned. The ld AO has to see whether the particular expenditure incurred is not personal in nature , is not capital in nature and incurred wholly and exclusively for the purpose of business of the assessee. When assessee is able to provide the business nexus of incurrence of certain expenditure with supporting documents, it cannot be simply denied / rejected by the revenue merely on the ground of propriety, which action would lead to, travelling beyond the brief and stepping into the shoes of the assessee by the revenue. The various apex court decisions relied upon by the ld AR supra clearly point out this ratio. We therefore hold that the expenditure incurred by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 1-8-2012 (supra) in its clarification has enlarged the scope and applicability of 'Indian Medical Council Regulation 2002' by making it applicable to the pharmaceutical companies or allied health care sector industries. Such an enlargement of scope of MCI regulation to the pharmaceutical companies by the CBDT is without any enabling provisions either under the provisions of Income Tax Law or by any provisions under the Indian Medical Council Regulations. The CBDT cannot provide casus omissus to a statute or notification or any regulation which has not been expressly provided therein. The CBDT can tone down the rigours of law and ensure a fair enforcement of the provisions by issuing circulars and by clarifying the statutory provisions. CBDT circulars act like 'contemporaneaexpositio' in interpreting the statutory provisions and to ascertain the true meaning enunciated at the time when statute was enacted. However the CBDT in its power cannot create a new impairment adverse to an assessee or to a class of assessee without any sanction of law. The circular issued by the CBDT must confirm to tax laws and for purpose of giving administrative relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02.11.2016 where the Board had clarified that the deduction under Chapter VI-A will be on such profits including disallowance under sections 32, 40(a)(ia), 40A(3), 43B etc of the Act which will include disallowance made u/s.37(1) as well. 2.9. We also find from the computation of income made by the ld AO, that the ld AO had disallowed the entire Sales promotion, advertisement and publicity expenses u/s 37(1) of the Act separately. Further he had again reduced the claim of deduction u/s 80IC of the Act by the very same amount of sales promotion, advertisement and publicity. This would effectively result in double disallowance made by the ld AO which we direct the ld AO to rectify. 2.10. The aforesaid findings on the issue of admissibility of sales promotion, advertisement and publicity would cover the assessee s appeal in ITA No. 2755/Chny/2017 and also Grounds 3.1. and 3.2. of Revenue s appeal in ITA No. 2793/Chny/2017. The same are disposed off accordingly. 3. Cross Objection of assessee in CO No.14/Chny/2018 was stated to be withdrawn by the ld AR in support of which an affidavit was filed before us. Respectfully taking ..... X X X X Extracts X X X X X X X X Extracts X X X X
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