TMI Blog2022 (12) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... nantly for personal reasons. As rightly pointed out by the AO the Garba event was organized for the benefit of persons limited to those residing in his society. It was a religious programme conducted in the assesses society which he had sponsored as a resident of the society. The sole purpose for incurring the expense was not for the purpose of his profession but also on account of the fact that being a resident of the society he felt obliged to contribute towards the programme. As rightly pointed out by the AO, the immediate beneficiary of the sponsorship was the hospital and not the assessee. Similarly musical program organized for fellow colleagues is nothing but a social event which though helps in promoting the assessee but not only on his professional front but also personal front. This fact cannot be denied. So also the gifts given on marriages and diwali which have been rightly pointed out by the Revenue authorities as being incurred out of social obligations and conventions. All these expenses, cannot be said to have been incurred wholly and exclusively for the profession of the assessee so as to qualify for deduction u/s 37(1) - Decided against assessee. Expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereinafter referred to as ld.CIT(A) ] dated 17/5/2017 passed under section 250(6) of the Income Tax Act, 1961 [hereinafter referred to as the Act for short] for the Asst.Year 2013-14. 2. The assessee is aggrieved by the disallowance of various expenses claimed by it which were disallowed on the ground that they were found by the Revenue authorities to be personal in nature. The assessee, we have noted from orders of the authorities below, is a medical professional earning professional income, income from salary, house property and capital gain and from other sources. The expenses which were disallowed on being found to be personal in nature are the following: i) Professional development expenses Rs.7,49,560/- ii) Advertisement expenses Rs.61,000/- iii) Telephone Vehicle expenses Rs.20,000/- 3. The effective grounds raised by the assessee in this regard are as under: 2. The Learned Commissioner (Appeal) erred in confirming the disallowance of professional development expenditure of Rs.7,49,560/- are the invalid ground that said expenditure are of personal in nature and not allowable as deduction. 3. The Learned Commissioner (Appeal) erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us is that this expenditure was incurred for promoting and publicizing his professional network, that the gifts had been given to doctors who were in the professional circle associated with the assessee and the purpose was maintaining and strengthening relationship with the concerned persons, thus entirely incurred for purposes of the profession carried out by the assessee. That musical programme was organized and sponsored by the assessee for providing entertainment to the professional colleagues under his banner and under the banner of the hospital where he was carrying out his profession. That by incurring expenditure, he had made publicity of the hospital and enhanced his professional identity. Similar arguments were made for the expenditure incurred on garba event sponsored by the assessee. The contention of the assessee was that there were no personal benefits to the assessee by incurring this expenditure. It was further contended that the primary purpose for incurring this expenditure was to strengthen his professional net work and any incidental personal benefit was of no relevance while determining whether the claim was allowable to the assessee under the Income Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the medical treatment on eyes could not be held to be a business expenditure wholly and exclusively for the profession of the assessee,since eyes were essential and important not only for the business or profession, but for other purposes as well. The ld.DR contended that under section 37(1) of the Act, for allowance of claim of expenses the condition to be fulfilled was that the expenditure ought to have been incurred wholly and exclusively for the purpose of business of the assessee, and in the impugned case, the expenditure incurred by the assessee for organizing musical programme, garba events and giving gifts to the members on the occasion of marriage etc. could not be said to have been incurred wholly and exclusively for the purpose of business of the assessee, and therefore, had been rightly disallowed by the authorities below. Submissions in this regard were filed before us which are reproduced as under: It is respectfully submitted that giving gift to Doctor on marriage or otherwise would not lead to professional development of Dr.Keyur Parikh. The nature of such expenses is such that it cannot be linked directly with the professional development of any Doctor and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the expense done by one legal entity cannot be claimed by other legal entity under provision of the I.T Act and it is also covered with the fact that these expenses are not wholly and exclusively for the purpose of profession as provided in section-37 of the I.T Act. Hence, the claim of expenses is not justified on this ground as the same is not legally tenable and permissible. 9. Our attention was also drawn to the findings of the AO at para 3.1 page 4 of the order wherein he had pointed out that the assessee being a renowned cardiovascular doctor there was no need for him to advertise being well known to all and moreover the expenses were incurred for the benefit of people in his society where he lived and for medical circle and not for general public .No benefit could be said to accrue from these expenses therefore it was contended. The Ld.Counsel for the assessee responded by relying on the decision of ITAT, Ahmedabad Bench in the case of Sayaji Industries Ltd., 100 Taxman 110 (Ahd-ITAT) for the proposition that expenses incurred towards social obligations in respect of staff members during the course of business would be allowed as business expenditure. 10. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt obliged to contribute towards the programme. Also by sponsoring the programme, the assessee was allowed to put up hoarding of the hospital where he rendered his services. Therefore, as rightly pointed out by the AO, the immediate beneficiary of the sponsorship was the hospital and not the assessee. Similarly musical program organized for fellow colleagues is nothing but a social event which though helps in promoting the assessee but not only on his professional front but also personal front. This fact cannot be denied. So also the gifts given on marriages and diwali which have been rightly pointed out by the Revenue authorities as being incurred out of social obligations and conventions. All these expenses, cannot be said to have been incurred wholly and exclusively for the profession of the assessee so as to qualify for deduction u/s 37(1) of the Act. The case law relied on by the Ld.DR in the case of Dhimant Hiralal Thakkar(supra) applies squarely to the present case wherein expenses incurred on medical treatment of eyes of a solicitor was held to be personal in nature and not wholly and exclusively for the business/profession of the assessee while denying such claim. The deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .10,000/- was paid to the B.J. Medical College, Ahmedabad for the event B.J. Beats, 2012. 16. Arguments from both the sides were identical as in the case of professional development expenditure. Besides, the ld.DR also pleaded that guidelines by the Controlling Body of Doctors Association i.e. IMA prohibited self-promotion by way of advertisement. Reference was made to Chapter-VI of guidelines as under: Chapter-6 6.0 UNETHICAL ACTS ; A physician shall not aid or abet or commit any of the following acts which shall be construed as unethical - 6 6.1 Advertising: 6.1.1 Soliciting of patients directly or indirectly, by a physician, by a group of physicians or by institutions or organisations is unethical A physician shall not make use of hint / her (or his her name) as subject of any form or manner of advertising or publicity through any mode either aloneor in conjunction with others which is of such a character as to invite attention to him or to his professional position, skill appointments, associations, affliations or honours and/or of such character as would ordinarily result in his self aggrandizement A physician shall not give to any person, whether for comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer and endorsed by Ld. CIT(A) completely as per law and the same should be sustained. 17. We have heard both the parties. The advertisement expenses claimed, we find also do not qualify as incurred wholly and exclusively for the profession of the assessee. In the backdrop of facts that these expenses were incurred for advertising in the members directory of the society where he resided and for sponsoring a musical event in a medical college, the nature of expenditure we find is similar to that dealt with by us with regard to professional development expenses in ground no 2 above in our order. Our decision rendered therein will apply to the impugned advertisement expenses also. Accordingly, we hold that the advertisement expenses incurred by the assessee amounting to Rs.61,000/- are personal in nature and not incurred wholly and exclusively for the purpose of profession of the assessee and hence not allowable as per section 37(1) of the Act. 18. Even otherwise as rightly pointed out by the Ld.CIT(A) and the Ld.DR before us, advertising is an unethical act as per guidelines of the controlling body of medical professionals. For this reason also the expenses incurred on ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s related to them, are disallowed same are worked out as under: Particulars Amount of expenses 20% of expenses by assessee Expenses disallowed Balance -Telephone 66,085/- 13,217/- 5,041/- 8,176/- Vehicle petrol 3,04,024/- 60,805/- 31,299/- 29,506/- Vehicle repairs 2,67,024/- 53,405/- 53,405/- Depreciation on vehicle 1,28,930/- 25,786/- - 25,786/- Depreciation on mobile 14,825/- 2,965/- - 2,965/- Total 7,80,888/- 1,56,178/- 36,340/- 1,19,838/ - In view of the aforesaid amount of Rs.1,19,838/- is dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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