TMI Blog2021 (9) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, 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. - ITA No.4923/MUM/2018 - - - Dated:- 23-9-2021 - Shri S.Rifaur Rahman (Accountant Member) And Shri Ravish Sood (Judicial Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12,79,359 Observing, that the aforementioned 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), dated 10.12.2009 amending the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations 2002, the A.O was of the view that the assessee s claim for deduction of the aforesaid expenditure being in the nature of an expense that was prohibited by law was thus inadmissible as per the Explanation to Sec. 37(1) of the Act. Backed by his aforesaid observation the A.O assessed the loss of the assessee company vide his order passed u/s 143(3), dated 19.12.2017 at an amount of (-) ₹ 1,51,22,924/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). However, the CIT(A) not finding favour with the contentions advanced by the assesse upheld the aforesaid disallowances made by the A.O and dismissed the appeal. 5. The asessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorized Representative (for short A.R ) for the assessee, at the very ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the lower authorities and the material available on record, as well as considered the judicial pronouncements/CBDT circular/MCI Regulations that have been relied upon by them. Before us, the ld. A.R has assailed the adverse inferences that had been drawn by the lower authorities as regards the allowability of the aforesaid expenses on two fold basis viz. (i) that though the Medical Council Regulations, 2002 would apply to medical practitioners but the same were not applicable to the pharmaceutical companies and other health sector industry; and (ii) that the circular issued by CBDT cannot impose an obligation adverse to an assessee. 8. Before adverting to the issue as to whether the CBDT Circular No. 5/2012, dated 01.08.2002 and MCI Regulations would be applicable to the assessee before us, we think it apt to deal with the nature of expenses which were claimed as a deduction but had been disallowed by the A.O by invoking Explanation 1 to Sec. 37 of the Act, for the reason, that the same were hit by the CBDT Circular No. 5/2012, dated 01.08.2012 r.w the MCI Regulations. As observed by us hereinabove, the assessee had incurred certain expenditure towards holding a conferenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Aristo Pharmaceuticals Pvt. ltd. Vs. ACIT (ITA No. 6680/Mum/2012, dated 26.07.2018). In the aforesaid order, the Tribunal had after exhaustive deliberations observed that as per the provisions of the Indian Medical Council Act, 1956 the scope and ambit of the statutory provisions relating to professional misconduct of registered medical practitioners under the Indian Medical Council Act, 1956 is restricted only to the persons registered as medical practitioners with the State Medical Council and whose name is entered in the Indian Medical Register maintained under Sec. 21 of the said Act. Further, it was observed, that the scheme of the Indian Medical Council Act, 1956 neither deals with nor provides for any conduct of any association/society, and only regulates the conduct of registered medical practitioners and not the pharmaceutical companies or allied health sector industries. Apart from that, the Tribunal in its order had also drawn support from the order of the Hon ble High Court of Delhi in the case of MAX Hospital., Pitampura Vs. Medical Council of India [CWP No. 1334/2013, dated 10.01.2014]. In the aforesaid case, the Medical Council of India (MCI) had filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Medical Council of India, find that the same lays down the code of conduct in respect of the doctors and other medical professionals registered with it, and are not applicable to the pharmaceuticals or allied health sector industries. Rather, a perusal of the provisions of the Indian Medical Council Act, 1956, reveals that the scope and ambit of statutory provisions relating to professional conduct of registered medical practitioners under the Indian Medical Council Act, 1956 is restricted only to the persons registered as medical practitioners with the State Medical Council and whose name are entered in the Indian Medical Register maintained under Sec. 21 of the said Act. We are of the considered view that the scheme of the Indian Medical Council Act, 1956 neither deals with nor provides for any conduct of any association/society and deals only with the conduct of individual registered medical practitioners. In the backdrop of the aforesaid facts, it emerges that the applicability of the MCI regulations would only cover individual medical practitioners and not the pharmaceutical companies or allied health sector industries. Interestingly, the scope of the applicability of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the code of conduct of the medical practitioners/doctors, therefore, in the absence of any prohibition on the pharmaceutical companies in incurring of such sales promotion expenses, the latter cannot be held to have incurred an expenditure for a purpose which is an offence or is prohibited by law. In this regard we are reminded of the maxim Expressio Unius Est Exclusio Alterius , which provides that if a particular expression in the statute is expressly stated for a particular class of assessee, then by implication what has not been stated or expressed in the statute has to be excluded for other class of assesses. Thus, now when the MCI regulations are applicable to medical practitioners registered with the MCI, then the same cannot be made applicable to pharmaceutical companies or other allied healthcare companies. 22. We shall now advert to the CBDT Circular No. 5/2012, dated 01.08.2012. We find that the aforesaid CBDT Circular reads as under:- Inadmissibility of expenses incurred in providing freebees to medical practitioner by pharmaceutical and allied health sector industry Circular No. 5/2012 [F.No. 225/142/2012-ITA.II], dated 1-8-2012 It has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies or allied health sector industries to medical practitioners or their professional associations in violation of the provisions of Indian Medical Council (Professional Conduct, Etiquette and Ethics) regulations, 2002 shall be inadmissible under Sec. 37(1) of the Income Tax Act, 1961, as the same would be an expense prohibited by the law. We are of the considered view that as observed by us hereinabove, the code of conduct enshrined in the notifications issued by MCI though is to be strictly followed and adhered by medical practitioners/doctors registered with the MCI, however the same cannot impinge on the conduct of the pharmaceutical companies or other healthcare sector in any manner. We find that nothing has brought on record which could persuade us to conclude that the regulations or notifications issued by MCI would as per the law also be binding on the pharmaceutical companies or other allied healthcare sector. Rather, the concession made by the MCI before the Hon ble High Court of Delhi in the case of Max Hospital Vs. MCI (CWP No. 1334/2013, dated 10.01.2014) fortifies our aforesaid view that MCI has no jurisdiction to pass any order or regulation against any hospit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26.07.2018), wherein it was observed as under : 23. We find that the CBDT as per its Circular No. 5/2012, dated 01.08.2012 had enlarged the scope and applicability of Indian Medical Council Regulation, 2002, by making the same applicable even to the pharmaceutical companies or allied healthcare sector industries. We are of the considered view that such an enlargement of the scope of MCI regulation to the pharmaceutical companies by the CBDT is without any enabling provision either under the Income Tax Act or under the Indian Medical Council Regulations. We are of a strong conviction that the CBDT cannot provide casus omissus to a statute or notification or any regulation which has not been expressly provided therein. Still further, 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 power to create a new impairment adverse to an assessee or to a class of assessee without any sanction or authority of law. We are of the considered view that the circulars which are issued by the CBDT must confirm to the tax laws and though are meant fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harmaceuticals Pvt. ltd.(supra) had considered the said order. Be that as it may, in the case of Liva Healthcare Ltd. (supra), though the Tribunal had incorporated the relevant provisions and clauses of the Indian Medical Council Regulation 2002, however, it had not elaborated or dwelled upon the issue as to how this MCI regulation which was strictly meant for medical practitioners and doctors could be made applicable to pharmaceutical companies and other health sector industry. We, thus, in terms of our aforesaid observations and respectfully following the view taken by the co-ordinate bench of the Tribunal i.e ITAT A Bench, Mumbai, in the case of Aristo Pharmaceuticals Pvt. ltd. Vs. ACIT (ITA No. 6680/Mum/2012, dated 26.07.2018), are of the considered view that the expenditure of ₹ 12,79,359/- incurred by the assessee towards, viz. (i) Bangalore Orthopaedic Society Conference for practical use of products : ₹ 4,49,934/-; and (iii). Payments made towards travelling expense of doctors for attending the workshops organized at France a/w the expenditure incurred towards their stay, honorarium fees etc. : ₹ 8,29,425/- would not be hit by the Explanation to Sec. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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