GALDERMA INDIA P. LTD.,MUMBAI vs. ASSTT. CIT - 9(3)(2), MUMBAI

Before us, the Ld. Counsel of the assessee proposed that the Ld. Counsel of the assessee proposed that the Ld. Counsel of the assessee proposed that appeal for assessment year 2015 appeal for assessment year 2015-16 might be taken as lead case for 16 might be taken as lead case for adjudication and result of the and result of the same to be applied mutatis mutandis mutatis mutandis on the appeals for assessment year 2014 on the appeals for assessment year 2014-15 and 2013 15 and 2013-14. The Ld. Departmental Representative (DR) did not object for the same. Departmental Representative (DR) did not object f Departmental Representative (DR) did not object f Galderma India Pvt. Ltd. 3 1987, 1988, 1964 & 1747/M/2019, 1987, 1988, 1964 & 1965/M/2020 Accordingly, firstly, firstly, we took up the appeals for assessment year up the appeals for assessment year 2015-16 for adjudication. adjudication.

The sole ground raised by the assessee in appeal for ground raised by the assessee in appeal for ground raised by the assessee in appeal for assessment year 2015 assessment year 2015-16 is reproduced as under:

Briefly stated, facts of the case are that the assessee company Briefly stated, facts of the case are that the assessee company Briefly stated, facts of the case are that the assessee company during the year under consideration was engaged in the business of during the year under consideration was engaged in the business of during the year under consideration was engaged in the business of marketing & trading ting & trading ‘dermatology’ products. The assessee company products. The assessee company is a wholly owned subsidiary is a wholly owned subsidiary of ‘Galderma Pharma SA Galderma Pharma SA’, a Switzerland Company. For the year under consideration, the Switzerland Company. For the year under consideration, the Switzerland Company. For the year under consideration, the assessee filed return of income on 27.11.20 assessee filed return of income on 27.11.2015 declaring total 15 declaring total income at Rs.35,82,09,750/ income at Rs.35,82,09,750/-. The return of income filed by the . The return of income filed by the assessee was selected for scrutiny and statutory notices under the assessee was selected for scrutiny and statutory notices under the assessee was selected for scrutiny and statutory notices under the Income-tax Act, 1961 (in short ‘the Act’) were issued and complied tax Act, 1961 (in short ‘the Act’) were issued and complied tax Act, 1961 (in short ‘the Act’) were issued and complied with. During the course of assessment with. During the course of assessment proceedings, the Assessing oceedings, the Assessing Galderma India Pvt. Ltd. 4 1987, 1988, 1964 & 1747/M/2019, 1987, 1988, 1964 & 1965/M/2020 Officer (AO) observed observed expenses incurred by the assessee incurred by the assessee for payments to the doctors and their professional associations, which to the doctors and their professional associations, which to the doctors and their professional associations, which according to him were inviolation of Medical Council of India (MCI) according to him were inviolation of Medical Council of India according to him were inviolation of Medical Council of India Regulation and CBDT Circular No. 5/2 Regulation and CBDT Circular No. 5/2012 dated 01.08.2012. Out 012 dated 01.08.2012. Out of the total expenses of Rs.15,34,05,440/ of the total expenses of Rs.15,34,05,440/- debited under the head debited under the head ‘sales promotion and marketing expenses, t romotion and marketing expenses, the Assessing Officer he Assessing Officer disallowed expenses to the disallowed expenses to the extent of Rs.2,55,38,829/ Rs.2,55,38,829/- observing as under:

The Ld. Assessing Officer supported the finding relying on the The Ld. Assessing Officer supported the finding relying on the The Ld. Assessing Officer supported the finding relying on the decision of the Hon’ble Allahabad High Court in the case of Abdul decision of the Hon’ble Allahabad High Court in the c decision of the Hon’ble Allahabad High Court in the c Hameed v. Mohd. Ishaq [AIR 1975 All. 166] Hameed v. Mohd. Ishaq [AIR 1975 All. 166], to explain the term , to explain the term Galderma India Pvt. Ltd. 6 1987, 1988, 1964 & 1747/M/2019, 1987, 1988, 1964 & 1965/M/2020 “prohibited by law”. He further relied on the decision of . He further relied on the decision of . He further relied on the decision of Hon’ble Punjab & Haryana High Court in the case of CIT v. KAP Scan & Punjab & Haryana High Court in the case of CIT v. KAP Scan & Punjab & Haryana High Court in the case of CIT v. KAP Scan & Diagnostic Centre Private Limited [2012] 344 ITR 476 to Diagnostic Centre Private Limited [2012] 344 ITR 476 Diagnostic Centre Private Limited [2012] 344 ITR 476 support that paying commission to private doctors is unethical, support that paying commission to private doctors i support that paying commission to private doctors i against public policy and forbidden by law and therefore, same was against public policy and forbidden by law and therefore, same was against public policy and forbidden by law and therefore, same was not allowable being prohibited by Regulation 6.4.1 and 6.4.2 of the not allowable being prohibited by Regulation 6.4.1 and 6.4.2 of the not allowable being prohibited by Regulation 6.4.1 and 6.4.2 of the MCI Regulations.

On further appeal, the Ld. CIT(A) On further appeal, the Ld. CIT(A) following the finding of his following the finding of his predecessor partly allowed the appeal in favour of the assessee. Out predecessor partly allowed the appeal in favour of the assessee. Out predecessor partly allowed the appeal in favour of the assessee. Out of the total expenses disallowed by the Assessing Officer, the Ld. of the total expenses disallowed by the Assessing Officer, the Ld. of the total expenses disallowed by the Assessing Officer, the Ld. CIT(A) upheld the disallowance of Rs.1,98,47,412/ the disallowance of Rs.1,98,47,412/- in respect of the disallowance of Rs.1,98,47,412/ certain expenses observing certain expenses observing as under:

Aggrieved with the above finding of the Ld. CIT(A) both the Aggrieved with the above finding of the Ld. CIT(A) both the Aggrieved with the above finding of the Ld. CIT(A) both the assessee and the Revenue are in appeal before the Tribunal by way assessee and the Revenue are in appeal before the Tribunal by way assessee and the Revenue are in appeal before the Tribunal by way of raising grounds as reproduced above. of raising grounds as reproduced above.

Before us, the Ld. Counsel of the assessee has filed a Paper Before us, the Ld. Counsel of the assessee has filed a Paper Before us, the Ld. Counsel of the assessee has filed a Paper Book in two volumes containing pages 1 to 96 and 97 to 149.The Book in two volumes containing pages 1 to 96 and 97 to 149. Book in two volumes containing pages 1 to 96 and 97 to 149. Ld. Counsel also filed a compilation of case laws in support of Ld. Counsel also filed a compilation of case laws in support of Ld. Counsel also filed a compilation of case laws in support of ground raised.

The Ld. DR on the other hand, relied on the order of the Ld. The Ld. DR on the other hand, relied on the order of the Ld. The Ld. DR on the other hand, relied on the order of the Ld. Assessing Officer and submitted that the expenses incurred being Assessing Officer and submitted that the expenses incurred being Assessing Officer and submitted that the expenses incurred being against the public policy and which have been held by the Hon’ble against the public policy and which have been held by the Hon’ble against the public policy and which have been held by the Hon’ble Supreme Court in the case of Apex Laboratories Pvt. Ltd. (supra) Apex Laboratories Pvt. Ltd. (supra), Supreme Court in the in violation of law or prohibition of the law in violation of law or prohibition of the law, therefore, same are not therefore, same are not eligible u/s 37(1) of the Act. u/s 37(1) of the Act.

We have heard rival submission of the parties on the issue We have heard rival submission of the parties on the issue We have heard rival submission of the parties on the issue-in- dispute and perused the relevant material dispute and perused the relevant material on record. We find that on record. We find that Galderma India Pvt. Ltd. 11 1987, 1988, 1964 & 1747/M/2019, 1987, 1988, 1964 & 1965/M/2020 prior to the decision of the Hon’ble Supreme Court in the case of prior to the decision of the Hon’ble Supreme Court in the case of prior to the decision of the Hon’ble Supreme Court in the case of Apex Laboratories Pvt. Ltd. (supra) Apex Laboratories Pvt. Ltd. (supra), the expenditure on sales the expenditure on sales promotion and advertisement incurred in the form of (i) PG grant to promotion and advertisement incurred in the form of promotion and advertisement incurred in the form of doctors (ii) group meeting based group meeting based survey sponsoring (iii) (iii) IADVL other conferences and (iv) and (iv) free samples etc. were allowed by the Tribunal free samples etc. were allowed by the Tribunal in assessment year 2011 in assessment year 2011-12 and 2012-13 and appeal of the 13 and appeal of the Department against which is pending before the Hon’ble High Department against which is pending before the Hon’ble High Department against which is pending before the Hon’ble High Court. In earlier years, the Tribunal Court. In earlier years, the Tribunal has allowed the appeal mainly has allowed the appeal mainly on the ground that CBDT Circular No. 5/2012 was to be applied on the ground that CBDT Circular No. 5/2012 was to be applied on the ground that CBDT Circular No. 5/2012 was to be applied prospectively and not retrospectively and further MCI regulations prospectively and not retrospectively and further MCI regulations prospectively and not retrospectively and further MCI regulations were applicable on the medical practitioners and were not applicable on the medical practitioners and were not applicable on the medical practitioners and were not applicable to the pharmaceutical compan applicable to the pharmaceutical companies. But we find that the ies. But we find that the Hon’ble Supreme Court in the case of Apex Laboratories Pvt. Ltd. Hon’ble Supreme Court in the case of Apex Laboratories Pvt. Ltd. Hon’ble Supreme Court in the case of Apex Laboratories Pvt. Ltd. (supra) after considering the arguments from both sides held that after considering the arguments from both sides held that after considering the arguments from both sides held that expenses incurred for promotion of pharmaceutical products in the expenses incurred for promotion of pharmaceutical products in the expenses incurred for promotion of pharmaceutical products in the form of gifts or incentives (free form of gifts or incentives (freebies) to the doctors are are against public policy and being prohibited by law policy and being prohibited by law, same are not allowable u/s not allowable u/s 37(1) of the Act. The relevant finding of the Hon’ble Supreme Court 37(1) of the Act. The relevant finding of the Hon’ble Supreme Court 37(1) of the Act. The relevant finding of the Hon’ble Supreme Court (supra) is reproduced as under: is reproduced as under:

Furthermore, if the statutory limitations imposed by 25. Furthermore, if the statutory limitations imposed by 25. Furthermore, if the statutory limitations imposed by the 2002 Regulations are kept in mind, Explanation (1) the 2002 Regulations are kept in mind, Explanation (1) the 2002 Regulations are kept in mind, Explanation (1) to Section 37(1) Section 37(1) of the IT Act and the insertion of the IT Act and the insertion of Section 20A Section 20A of the Medical Council Act, 195623 of the Medical Council Act, 195623 (which serves as parent provision for the regulations), (which serves as parent provision for the regulations), (which serves as parent provision for the regulations), what is discernible is that the statutory regime requiring what is discernible is that the statutory regime requiring what is discernible is that the statutory regime requiring that a thing be done in a certain manner, also implies a thing be done in a certain manner, also implies a thing be done in a certain manner, also implies (even in the absence of any express terms), that the other (even in the absence of any express terms), that the other (even in the absence of any express terms), that the other forms of doing it are impermissible. forms of doing it are impermissible.

In this regard the decision of this Court in 26. In this regard the decision of this Court in 26. In this regard the decision of this Court in Jamal Uddin Ahmad v. Abu Saleh Najmuddin & Anr24 in Ahmad v. Abu Saleh Najmuddin & Anr24 in Ahmad v. Abu Saleh Najmuddin & Anr24 is of some relevance. There, the scope of some relevance. There, the scope of Section 81 Section 81 of the Representation of the People Act, 1951 was examined in Representation of the People Act, 1951 was examined in Representation of the People Act, 1951 was examined in the light of powers of the High Court to adminis the light of powers of the High Court to adminis the light of powers of the High Court to administer election petitions by invoking the rule of implied election petitions by invoking the rule of implied election petitions by invoking the rule of implied prohibition. The Court observed that: prohibition. The Court observed that: “Dealing “Dealing “Dealing with with with "Statutes "Statutes "Statutes conferring conferring conferring power; power; power; implied implied implied conditions, judicial review", Justice G.P. Singh states in conditions, judicial review", Justice G.P. Singh states in conditions, judicial review", Justice G.P. Singh states in the Principles of Statutory Interpretation (Eight Edit the Principles of Statutory Interpretation (Eight Edit the Principles of Statutory Interpretation (Eight Edition 2001, at pp. 333, 334) that a power conferred by a 2001, at pp. 333, 334) that a power conferred by a 2001, at pp. 333, 334) that a power conferred by a statute often contains express conditions for its exercise statute often contains express conditions for its exercise statute often contains express conditions for its exercise and in the absence of or in addition to the express and in the absence of or in addition to the express and in the absence of or in addition to the express conditions there are also implied conditions for exercise of conditions there are also implied conditions for exercise of conditions there are also implied conditions for exercise of the power. An affirmative sta the power. An affirmative statute introductive of a new tute introductive of a new law directing a thing to be done in a certain way law directing a thing to be done in a certain way law directing a thing to be done in a certain way mandates, even if there be no negative words, that the mandates, even if there be no negative words, that the mandates, even if there be no negative words, that the thing shall not be done in any other way. This rule of thing shall not be done in any other way. This rule of thing shall not be done in any other way. This rule of implied prohibition is subserved to the basic principle implied prohibition is subserved to the basic principle implied prohibition is subserved to the basic principle that the Cour that the Court must, as far as possible, attach a t must, as far as possible, attach a construction which effectuates the legislative intent and construction which effectuates the legislative intent and construction which effectuates the legislative intent and purpose. Further, the rule of implied prohibition does not purpose. Further, the rule of implied prohibition does not purpose. Further, the rule of implied prohibition does not negative the principle that an express grant of statutory negative the principle that an express grant of statutory negative the principle that an express grant of statutory power carries with it by necessary implicati power carries with it by necessary implicati power carries with it by necessary implication the authority to use all reasonable means to make such grant authority to use all reasonable means to make such grant authority to use all reasonable means to make such grant effective. To illustrate, an Act of Parliament conferring effective. To illustrate, an Act of Parliament conferring effective. To illustrate, an Act of Parliament conferring jurisdiction over an offence implies a power in that jurisdiction over an offence implies a power in that jurisdiction over an offence implies a power in that jurisdiction to make out a warrant and secure production jurisdiction to make out a warrant and secure production jurisdiction to make out a warrant and secure production of the person charged wi of the person charged with the offence; power conferred th the offence; power conferred on Magistrate to grant maintenance under on Magistrate to grant maintenance under Section 125 of the Code of Criminal Procedure 1973 to prevent of the Code of Criminal Procedure 1973 to prevent of the Code of Criminal Procedure 1973 to prevent Galderma India Pvt. Ltd. 13 1987, 1988, 1964 & 1747/M/2019, 1987, 1988, 1964 & 1965/M/2020 vagrancy implies a power to allow interim maintenance; vagrancy implies a power to allow interim maintenance; vagrancy implies a power to allow interim maintenance; power conferre power conferred on a local authority to issue licences for d on a local authority to issue licences for holding 'hats' or fairs implies incidental power to fix days holding 'hats' or fairs implies incidental power to fix days holding 'hats' or fairs implies incidental power to fix days therefore; power conferred to compel cane growers therefore; power conferred to compel cane growers therefore; power conferred to compel cane growers to Inserted vide Inserted vide Medical Council (Amendment) Act Medical Council (Amendment) Act, 1964. (2003) 4 SCC 257. (2003) 4 SCC 257. supply cane to sugar factories implies an incidental supply cane to sugar factories implies an incidental supply cane to sugar factories implies an incidental power to ensure payment of price. In short, conferment of power to ensure payment of price. In short, conferment of power to ensure payment of price. In short, conferment of a power implies authority to do everything which could a power implies authority to do everything which could a power implies authority to do everything which could be fairly and reasonably regarded as incidental or be fairly and reasonably regarded as incidental or be fairly and reasonably regarded as incidental or consequential consequential to the power conferred. *** Herbert Broom states in the preface to his celebrated *** Herbert Broom states in the preface to his celebrated *** Herbert Broom states in the preface to his celebrated work on Legal Maxims work on Legal Maxims --"In the Legal Science, perhaps "In the Legal Science, perhaps more frequently than in any other, reference must be more frequently than in any other, reference must be more frequently than in any other, reference must be made to first principles." The fundamentals or the first made to first principles." The fundamentals or the first made to first principles." The fundamentals or the first principles of law often articulated as the maxims are s of law often articulated as the maxims are s of law often articulated as the maxims are manifestly founded in reason, public convenience and manifestly founded in reason, public convenience and manifestly founded in reason, public convenience and necessity. Modern trend of introducing subtleties and necessity. Modern trend of introducing subtleties and necessity. Modern trend of introducing subtleties and distinctions, both in legal reasoning and in the distinctions, both in legal reasoning and in the distinctions, both in legal reasoning and in the application of legal principles, formerly unknown, have application of legal principles, formerly unknown, have application of legal principles, formerly unknown, have rendered an accurate acquaintance with the first rendered an accurate acquaintance with the first rendered an accurate acquaintance with the first principles more necessary rather than diminishing the principles more necessary rather than diminishing the principles more necessary rather than diminishing the values of simple fundamental rules. The fundamental values of simple fundamental rules. The fundamental values of simple fundamental rules. The fundamental rules are the basis of the law; may be either directly rules are the basis of the law; may be either directly rules are the basis of the law; may be either directly applied, or qualified or limited, according t applied, or qualified or limited, according t applied, or qualified or limited, according to the exigencies of the particular case and the novelty of the exigencies of the particular case and the novelty of the exigencies of the particular case and the novelty of the circumstances which present themselves. circumstances which present themselves. In Dhannalal In Dhannalal vs. Kalawatibai and Ors vs. Kalawatibai and Ors.25 this court has held that: .25 this court has held that: "When the statute does not provide th "When the statute does not provide the path and the e path and the precedents abstain to lead, then sound logic, rational precedents abstain to lead, then sound logic, rational precedents abstain to lead, then sound logic, rational reasoning, common sense and urge for public good play reasoning, common sense and urge for public good play reasoning, common sense and urge for public good play as guides of those who decide".” as guides of those who decide".”

It is also a settled principle of law that no court will 27. It is also a settled principle of law that no court will 27. It is also a settled principle of law that no court will lend its aid to a party that roots its cause of action in an lend its aid to a party that roots its cause of action in an lend its aid to a party that roots its cause of action in an immoral or illegal act (ex dolo malo non oritur action) immoral or illegal act (ex dolo malo non oritur action) immoral or illegal act (ex dolo malo non oritur action) meaning that none should be allowed to profit from any meaning that none should be allowed to profit from any meaning that none should be allowed to profit from any Galderma India Pvt. Ltd. 14 1987, 1988, 1964 & 1747/M/2019, 1987, 1988, 1964 & 1965/M/2020 wrongdoing coupled with wrongdoing coupled with the fact that statutory regimes the fact that statutory regimes should be coherent and not self should be coherent and not self- defeating. Doctors and defeating. Doctors and pharmacists being complementary and supplementary to pharmacists being complementary and supplementary to pharmacists being complementary and supplementary to each other in the medical profession, a comprehensive each other in the medical profession, a comprehensive each other in the medical profession, a comprehensive view must be adopted to regulate their conduct in view of view must be adopted to regulate their conduct in view of view must be adopted to regulate their conduct in view of the contemporary statutory regimes and regulations. e contemporary statutory regimes and regulations. e contemporary statutory regimes and regulations. Therefore, denial of the tax benefit cannot be construed Therefore, denial of the tax benefit cannot be construed Therefore, denial of the tax benefit cannot be construed as penalizing the assessee pharmaceutical company. as penalizing the assessee pharmaceutical company. as penalizing the assessee pharmaceutical company. Only its participation in what is plainly an action Only its participation in what is plainly an action Only its participation in what is plainly an action prohibited by law, precludes the assessee from prohibited by law, precludes the assessee from claiming claiming it as a deductible expenditure. it as a deductible expenditure.

This Court also notices that medical practitioners 28. This Court also notices that medical practitioners 28. This Court also notices that medical practitioners have a quasi have a quasi-fiduciary relationship with their patients. A fiduciary relationship with their patients. A doctor’s prescription is considered the final word on the doctor’s prescription is considered the final word on the doctor’s prescription is considered the final word on the medication to be availed by the patient, e medication to be availed by the patient, even if the cost of ven if the cost of such (2002) 6 SCC 16. (2002) 6 SCC 16. medication is unaffordable or barely within the economic medication is unaffordable or barely within the economic medication is unaffordable or barely within the economic reach of the patient reach of the patient – such is the level of trust reposed in such is the level of trust reposed in doctors. Therefore, it is a matter of great public doctors. Therefore, it is a matter of great public doctors. Therefore, it is a matter of great public importance and concern, when it is demonstrate importance and concern, when it is demonstrated that a d that a doctor’s prescription can be manipulated, and driven by doctor’s prescription can be manipulated, and driven by doctor’s prescription can be manipulated, and driven by the motive to avail the freebies offered to them by the motive to avail the freebies offered to them by the motive to avail the freebies offered to them by pharmaceutical companies, ranging from gifts such as pharmaceutical companies, ranging from gifts such as pharmaceutical companies, ranging from gifts such as gold coins, fridges and LCD TVs to funding international gold coins, fridges and LCD TVs to funding international gold coins, fridges and LCD TVs to funding international trips for vacations or to att trips for vacations or to attend medical conferences. end medical conferences. These freebies are technically not ‘free’ These freebies are technically not ‘free’ – the cost of the cost of supplying such freebies is usually factored into the drug, supplying such freebies is usually factored into the drug, supplying such freebies is usually factored into the drug, driving prices up, thus creating a perpetual publicly driving prices up, thus creating a perpetual publicly driving prices up, thus creating a perpetual publicly injurious cycle. The threat of prescribing medication that injurious cycle. The threat of prescribing medication that injurious cycle. The threat of prescribing medication that is significantly marked up, over effective generic significantly marked up, over effective generic significantly marked up, over effective generic counterparts in lieu of such a quid pro quo exchange was counterparts in lieu of such a quid pro quo exchange was counterparts in lieu of such a quid pro quo exchange was taken cognizance of by the Parliamentary Standing taken cognizance of by the Parliamentary Standing taken cognizance of by the Parliamentary Standing Committee on Health and Family Welfare26 which made Committee on Health and Family Welfare26 which made Committee on Health and Family Welfare26 which made the following observations: the following observations: “The Committee also n “The Committee also notes that despite there being a otes that despite there being a code of ethics in the Indian Medical Council Rules code of ethics in the Indian Medical Council Rules code of ethics in the Indian Medical Council Rules introduced in December 2009 forbidding doctors from introduced in December 2009 forbidding doctors from introduced in December 2009 forbidding doctors from accepting any gift, hospitality, trips to foreign and accepting any gift, hospitality, trips to foreign and accepting any gift, hospitality, trips to foreign and domestic destinations etc from healthcare industry, there domestic destinations etc from healthcare industry, there domestic destinations etc from healthcare industry, there Galderma India Pvt. Ltd. 15 1987, 1988, 1964 & 1747/M/2019, 1987, 1988, 1964 & 1965/M/2020 is no let-up in this evil practice and the pharma up in this evil practice and the pharma up in this evil practice and the pharma companies continue to sponsor foreign trips of many companies continue to sponsor foreign trips of many companies continue to sponsor foreign trips of many doctors and shower with high value gifts like air doctors and shower with high value gifts like air doctors and shower with high value gifts like air conditioners, cars, music systems, gold chains etc. to conditioners, cars, music systems, gold chains etc. to conditioners, cars, music systems, gold chains etc. to obliging prescribers who then prescribe costlier drugs as obliging prescribers who then prescribe costlier drugs as obliging prescribers who then prescribe costlier drugs as quid pro quo. Ultimately all these expenses get added up quid pro quo. Ultimately all these expenses get added up quid pro quo. Ultimately all these expenses get added up to the cost of drugs. The Committee’s attention was to the cost of drugs. The Committee’s attention was to the cost of drugs. The Committee’s attention was drawn to a news item in Times of India dated July 1, drawn to a news item in Times of India dated July 1, drawn to a news item in Times of India dated July 1, 2010 by Reema Nagarajan giving specific instances of 2010 by Reema Nagarajan giving specific instances of 2010 by Reema Nagarajan giving specific instances of violations of MCI code. The Committee cal violations of MCI code. The Committee calls upon the ls upon the Government to take strict and speedy action on such Government to take strict and speedy action on such Government to take strict and speedy action on such violations. Since MCI has no jurisdiction over drug violations. Since MCI has no jurisdiction over drug violations. Since MCI has no jurisdiction over drug companies, the Government should take parallel action companies, the Government should take parallel action companies, the Government should take parallel action through DCGI and the Income Tax Department to penalize through DCGI and the Income Tax Department to penalize through DCGI and the Income Tax Department to penalize those companies that violate MC those companies that violate MCI rules by cancelling drug I rules by cancelling drug manufacturing licences and/or disallowing expenses on manufacturing licences and/or disallowing expenses on manufacturing licences and/or disallowing expenses on unethical activities.” (emphasis supplied) Interestingly, a unethical activities.” (emphasis supplied) Interestingly, a unethical activities.” (emphasis supplied) Interestingly, a similar conclusion was arrived at by the US Department similar conclusion was arrived at by the US Department similar conclusion was arrived at by the US Department of Health and Human Services Office of the Assistant of Health and Human Services Office of the Assistant of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation, in a report called ry for Planning and Evaluation, in a report called ry for Planning and Evaluation, in a report called Savings Available Under Full Generic Substitution Savings Available Under Full Generic Substitution Savings Available Under Full Generic Substitution 45th Report on Issues Relating to Availability of Generic, Report on Issues Relating to Availability of Generic, Report on Issues Relating to Availability of Generic, Generic-Branded Branded Branded and and and Branded Branded Branded Medicines, Medicines, Medicines, their their their Formulation and Therapeutic Efficacy and Effectiven Formulation and Therapeutic Efficacy and Effectiven Formulation and Therapeutic Efficacy and Effectiveness), dated 04.08.2010. dated 04.08.2010. of Multiple Source Brand Drugs in Medicare Part D (dated of Multiple Source Brand Drugs in Medicare Part D (dated of Multiple Source Brand Drugs in Medicare Part D (dated 23.07.2018).27 The report noticed inter alia, that an 23.07.2018).27 The report noticed inter alia, that an 23.07.2018).27 The report noticed inter alia, that an empirical study conducted in respect of 20 odd (out of the empirical study conducted in respect of 20 odd (out of the empirical study conducted in respect of 20 odd (out of the 600 drugs which were the subject matter of the research 600 drugs which were the subject matter of the research 600 drugs which were the subject matter of the research paper) brand medications dispensed for a particular brand medications dispensed for a particular brand medications dispensed for a particular period, were capable of generic substitution and would period, were capable of generic substitution and would period, were capable of generic substitution and would have resulted in substantial benefit to the patients: have resulted in substantial benefit to the patients: have resulted in substantial benefit to the patients: “Beneficiaries could have saved over $600 million in out “Beneficiaries could have saved over $600 million in out “Beneficiaries could have saved over $600 million in out of pocket payments had they been dispensed g of pocket payments had they been dispensed g of pocket payments had they been dispensed generic equivalent drugs. A significant amount of this spending equivalent drugs. A significant amount of this spending equivalent drugs. A significant amount of this spending occurred among the top 20 multiple source brands. occurred among the top 20 multiple source brands. occurred among the top 20 multiple source brands. Substituting these drugs for generic competitors at their Substituting these drugs for generic competitors at their Substituting these drugs for generic competitors at their median prices would have saved the program and median prices would have saved the program and median prices would have saved the program and beneficiaries $1.8 billion.” Likewise, beneficiaries $1.8 billion.” Likewise, in a previous study in a previous study by ProPublica (an independent, non by ProPublica (an independent, non-profit newsroom that profit newsroom that Galderma India Pvt. Ltd. 16 1987, 1988, 1964 & 1747/M/2019, 1987, 1988, 1964 & 1965/M/2020 does investigative journalism) titled “Dollars for Doctors: does investigative journalism) titled “Dollars for Doctors: does investigative journalism) titled “Dollars for Doctors: Now Extracted from https://aspe.hhs.gov/reports/data Extracted from https://aspe.hhs.gov/reports/data Extracted from https://aspe.hhs.gov/reports/data- point-savings savings-available-under-full-generic-substitution substitution- multiple-source source-brand-drugs-medicare accessed at 16:37 medicare accessed at 16:37 on 13.02.2022. The report states, inter alia, that: “More on 13.02.2022. The report states, inter alia, that: “More on 13.02.2022. The report states, inter alia, that: “More 600 brand name drugs were dispensed and paid for by 600 brand name drugs were dispensed and paid for by 600 brand name drugs were dispensed and paid for by Part D plans in 2016, despite the presence of generic Part D plans in 2016, despite the presence of generic Part D plans in 2016, despite the presence of generic competition. Plans and beneficiaries paid $8.7 competition. Plans and beneficiaries paid $8.7 billion for billion for multiple source brands and $34.0 billion for generics. Full multiple source brands and $34.0 billion for generics. Full multiple source brands and $34.0 billion for generics. Full substitution of multiple source brands would have substitution of multiple source brands would have substitution of multiple source brands would have resulted in total spending on generic drugs of $39.9 resulted in total spending on generic drugs of $39.9 resulted in total spending on generic drugs of $39.9 billion, saving the Part D program and its beneficiaries billion, saving the Part D program and its beneficiaries billion, saving the Part D program and its beneficiaries $2.8 billion in 2016. T $2.8 billion in 2016. These estimates do not account for hese estimates do not account for manufacturer rebates paid to Part D plans or pharmacy manufacturer rebates paid to Part D plans or pharmacy manufacturer rebates paid to Part D plans or pharmacy benefit managers (PBMs) or statutory discounts paid by benefit managers (PBMs) or statutory discounts paid by benefit managers (PBMs) or statutory discounts paid by manufacturers for brand name drugs, and thus may manufacturers for brand name drugs, and thus may manufacturers for brand name drugs, and thus may overstate savings to the program after accounting for the overstate savings to the program after accounting for the overstate savings to the program after accounting for the effects that rebates often have on premiums. See Figure s that rebates often have on premiums. See Figure s that rebates often have on premiums. See Figure 1. *********** Of this $2.8 billion, $2.25 billion is for brand 1. *********** Of this $2.8 billion, $2.25 billion is for brand 1. *********** Of this $2.8 billion, $2.25 billion is for brand name drugs that have faced generic competition for at name drugs that have faced generic competition for at name drugs that have faced generic competition for at least a full year (e.g. the first generic was available in least a full year (e.g. the first generic was available in least a full year (e.g. the first generic was available in 2015 or earlier). A further $ 2015 or earlier). A further $584 million in savings is 584 million in savings is estimated for substituting generics that were first estimated for substituting generics that were first estimated for substituting generics that were first launched in 2016 and therefore on the market for less launched in 2016 and therefore on the market for less launched in 2016 and therefore on the market for less than a full year. These 12 Single source includes than a full year. These 12 Single source includes than a full year. These 12 Single source includes payments for brand drugs prior to generic entry, e.g. payments for brand drugs prior to generic entry, e.g. payments for brand drugs prior to generic entry, e.g. $1.13 billion of Cre $1.13 billion of Crestor spending in the example used in stor spending in the example used in the Methods section. savings are likely to grow as the Methods section. savings are likely to grow as the Methods section. savings are likely to grow as additional additional additional generic generic generic competitors competitors competitors enter enter enter the the the market. market. market. Beneficiaries spent $1.1 billion out Beneficiaries spent $1.1 billion out-of-pocket in cost pocket in cost- sharing for brand drugs with comparable generics, sharing for brand drugs with comparable generics, sharing for brand drugs with comparable generics, averaging averaging twic twice as much out-of-pocket pocket than than for for comparable generics. In 2016, multiple source brand comparable generics. In 2016, multiple source brand comparable generics. In 2016, multiple source brand drug cost- sharing averaged $39.15, while generic cost sharing averaged $39.15, while generic cost sharing averaged $39.15, while generic cost- sharing sharing sharing for for for substitutable substitutable substitutable products products products was was was $17.04. $17.04. $17.04. Beneficiaries could have saved over $600 million in out of Beneficiaries could have saved over $600 million in out of Beneficiaries could have saved over $600 million in out of pocket payments had they been dispensed generic ments had they been dispensed generic ments had they been dispensed generic equivalent drugs. A significant amount of this spending equivalent drugs. A significant amount of this spending equivalent drugs. A significant amount of this spending occurred among the top 20 multiple source brands. occurred among the top 20 multiple source brands. occurred among the top 20 multiple source brands. Substituting these drugs for generic competitors at their Substituting these drugs for generic competitors at their Substituting these drugs for generic competitors at their median prices would have saved the program and median prices would have saved the program and median prices would have saved the program and Galderma India Pvt. Ltd. 17 1987, 1988, 1964 & 1747/M/2019, 1987, 1988, 1964 & 1965/M/2020 beneficiaries $1.8 billion. See Appendix Table A for these iaries $1.8 billion. See Appendix Table A for these iaries $1.8 billion. See Appendix Table A for these drugs, and figure 2 below for an example. In terms of drugs, and figure 2 below for an example. In terms of drugs, and figure 2 below for an example. In terms of beneficiary cost beneficiary cost-sharing, we find similar results as for the sharing, we find similar results as for the overall calculation. Average per beneficiary spending is overall calculation. Average per beneficiary spending is overall calculation. Average per beneficiary spending is significantly higher for these b significantly higher for these brands than for the rands than for the substitutable generics. (See Appendix Table A, also.) substitutable generics. (See Appendix Table A, also.) substitutable generics. (See Appendix Table A, also.) Brand drug cost Brand drug cost-sharing averaged $30.69, compared to sharing averaged $30.69, compared to $22.41 for their generic equivalents. For 17 of the top 20 $22.41 for their generic equivalents. For 17 of the top 20 $22.41 for their generic equivalents. For 17 of the top 20 drugs, the ratio of brand to comparable generic out drugs, the ratio of brand to comparable generic out drugs, the ratio of brand to comparable generic out-of- pocket spending pocket spending ranges from 117% (Namenda) to 1,476% ranges from 117% (Namenda) to 1,476% (Lamictal) indicating significant per (Lamictal) indicating significant per-drug savings are drug savings are available for beneficiaries. In three cases (Abilify, available for beneficiaries. In three cases (Abilify, available for beneficiaries. In three cases (Abilify, Lovenox, and Tricor), beneficiary out Lovenox, and Tricor), beneficiary out-of-pocket costs are pocket costs are marginally higher for the generic than the brand dru marginally higher for the generic than the brand dru marginally higher for the generic than the brand drug. We believe this is due to the interaction of total drug costs believe this is due to the interaction of total drug costs believe this is due to the interaction of total drug costs and plan coverage in the coverage gap for generics (42% and plan coverage in the coverage gap for generics (42% and plan coverage in the coverage gap for generics (42% in 2016), meaning patients paid 58% coinsurance for in 2016), meaning patients paid 58% coinsurance for in 2016), meaning patients paid 58% coinsurance for generics that year. This compares to 25% plan coverage generics that year. This compares to 25% plan coverage generics that year. This compares to 25% plan coverage and a 50% statutory manufact and a 50% statutory manufacturer discount for brand urer discount for brand drugs in 2016.” drugs in 2016.” There’s Proof: Docs who Get Company There’s Proof: Docs who Get Company Cash Tend to Prescribe More Brand Cash Tend to Prescribe More Brand- Name Meds” (dated Name Meds” (dated 17.03.2016)28 stated that: 17.03.2016)28 stated that: “…doctors who receive payments from the medical “…doctors who receive payments from the medical “…doctors who receive payments from the medical industry do indeed tend to prescribe drugs different industry do indeed tend to prescribe drugs different industry do indeed tend to prescribe drugs differently than their colleagues who don’t. And the more money than their colleagues who don’t. And the more money than their colleagues who don’t. And the more money they they they receive, receive, receive, on on on average, average, average, the the the more more more brand-name brand brand medications they prescribe.” Data is now available medications they prescribe.” Data is now available medications they prescribe.” Data is now available publicly, in the United States, by reason of the Physician publicly, in the United States, by reason of the Physician publicly, in the United States, by reason of the Physician Payment Sunshine Act, 2010 i.e., Section 6002 Payment Sunshine Act, 2010 i.e., Section 6002 Payment Sunshine Act, 2010 i.e., Section 6002 of the Affordable Care Act, 2010. Affordable Care Act, 2010. This law compels manufacturers of drugs, devices, This law compels manufacturers of drugs, devices, This law compels manufacturers of drugs, devices, biologics, and medical supplies covered by Medicare, biologics, and medical supplies covered by Medicare, biologics, and medical supplies covered by Medicare, Medicaid, or the Children's Health Insurance Program to Medicaid, or the Children's Health Insurance Program to Medicaid, or the Children's Health Insurance Program to report to the Centers for Medicare & Medicaid Services on report to the Centers for Medicare & Medicaid Services on report to the Centers for Medicare & Medicaid Services on three broad categories of payments or "transfers of e broad categories of payments or "transfers of e broad categories of payments or "transfers of value". These categories cover general payments or value". These categories cover general payments or value". These categories cover general payments or transfers of value such as meals, travel reimbursement, transfers of value such as meals, travel reimbursement, transfers of value such as meals, travel reimbursement, and consulting fees. These include expenses borne by and consulting fees. These include expenses borne by and consulting fees. These include expenses borne by manufacturers, such as speaker fees, travel, gif manufacturers, such as speaker fees, travel, gif manufacturers, such as speaker fees, travel, gifts, Galderma India Pvt. Ltd. 18 1987, 1988, 1964 & 1747/M/2019, 1987, 1988, 1964 & 1965/M/2020 honoraria, honoraria, honoraria, entertainment, entertainment, entertainment, charitable charitable charitable contribution, contribution, contribution, education, grants and research grants, etc. education, grants and research grants, etc.

The impugned judgment, along with the judgments of 29. The impugned judgment, along with the judgments of 29. The impugned judgment, along with the judgments of Punjab & Haryana High Court (Kap Scan) and Himachal Punjab & Haryana High Court (Kap Scan) and Himachal Punjab & Haryana High Court (Kap Scan) and Himachal Pradesh High Court (Confederation) (supra) have co Pradesh High Court (Confederation) (supra) have co Pradesh High Court (Confederation) (supra) have correctly addressed the important public policy issue on the addressed the important public policy issue on the addressed the important public policy issue on the subject of allowance of benefit for supply of freebies. The subject of allowance of benefit for supply of freebies. The subject of allowance of benefit for supply of freebies. The impugned judgment’s reasoning is quoted as follows: impugned judgment’s reasoning is quoted as follows: impugned judgment’s reasoning is quoted as follows: “A perusal of the decision of Co “A perusal of the decision of Co-ordinate Bench of this ordinate Bench of this Tribunal in the assessee's ow Tribunal in the assessee's own case as also the decision n case as also the decision of the Hon'ble Himachal Pradesh High Court clearly of the Hon'ble Himachal Pradesh High Court clearly of the Hon'ble Himachal Pradesh High Court clearly shows that the basic intention of the decision was that shows that the basic intention of the decision was that shows that the basic intention of the decision was that the receiving of the gifts/freebies by Professionals is the receiving of the gifts/freebies by Professionals is the receiving of the gifts/freebies by Professionals is against public policy as also against the law in so far as against public policy as also against the law in so far as against public policy as also against the law in so far as the amendment by the endment by the Medical Council Act, 1956 to the , 1956 to the Indian Medical Council (Professional Conduct, Etiquette Indian Medical Council (Professional Conduct, Etiquette Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002, once receiving of such and Ethics) Regulations, 2002, once receiving of such and Ethics) Regulations, 2002, once receiving of such gifts have been held to be unethical obvious gifts have been held to be unethical obvious gifts have been held to be unethical obviously the corollary to this would also be unethical, being giving of corollary to this would also be unethical, being giving of corollary to this would also be unethical, being giving of such gifts or doing such acts to induce such Doctors and such gifts or doing such acts to induce such Doctors and such gifts or doing such acts to induce such Doctors and Medical Professionals to violate the Medical Professionals to violate the Medical Council Act Medical Council Act, 1956.” 1956.” 1956.” (emphasis (emphasis (emphasis supplied) https://www.propublica.org/article/doctors https://www.propublica.org/article/doctors- https://www.propublica.org/article/doctors who-take-company company-cash-tend-to-prescribe-more-brand brand- name- drugs accessed at 16:45 on 13.02 drugs accessed at 16:45 on 13.02-2022 30. Thus, one arm of the law cannot be utilised to defeat 30. Thus, one arm of the law cannot be utilised to defeat 30. Thus, one arm of the law cannot be utilised to defeat the other arm of law the other arm of law – doing so would be opposed to doing so would be opposed to public policy and bring the law into ridicule.29 blic policy and bring the law into ridicule.29 In Maddi In Maddi Venkataraman & Co. (P) Ltd. v. CIT30 Venkataraman & Co. (P) Ltd. v. CIT30, a fine imposed on , a fine imposed on the assessee under the the assessee under the Foreign Exchange Regulation Regulation Act, 1947 was sought to be deducted as a business , 1947 was sought to be deducted as a business , 1947 was sought to be deducted as a business expenditure. This Court held: expenditure. This Court held: “Moreover, it will be against public policy to allow the “Moreover, it will be against public policy to allow the “Moreover, it will be against public policy to allow the benefit benefit benefit of of of deduction deduction deduction under under under one one one statute, statute, statute, of of of any any any expenditure incurred in violation of the provisions of expenditure incurred in violation of the provisions of expenditure incurred in violation of the provisions of another statute or any penalty imposed under another r statute or any penalty imposed under another r statute or any penalty imposed under another Galderma India Pvt. Ltd. 19 1987, 1988, 1964 & 1747/M/2019, 1987, 1988, 1964 & 1965/M/2020 statute. In the instant case, if the deductions claimed are statute. In the instant case, if the deductions claimed are statute. In the instant case, if the deductions claimed are allowed, the penal provisions of FERA will become allowed, the penal provisions of FERA will become allowed, the penal provisions of FERA will become meaningless”. meaningless”. (emphasis supplied) (emphasis supplied) 10.1 Before us, the Ld. Counsel of the assessee has objected Before us, the Ld. Counsel of the assessee has objected Before us, the Ld. Counsel of the assessee has objected for applying the ratio of the Apex Laboratories Pvt. Ltd. (supra) mainly applying the ratio of the Apex Laboratories Pvt. Ltd. (supra) mainly applying the ratio of the Apex Laboratories Pvt. Ltd. (supra) mainly on the ground that no violation of MCI Regulations has been on the ground that no violation of MCI Regulations has been on the ground that no violation of MCI Regulations has been observed in the case of assessee by the relevant regulators. The Ld. observed in the case of assessee by the relevant regulators. The Ld. observed in the case of assessee by the relevant regulators. The Ld. Counsel relied on the decision of the Hon’ble Supreme Court in the Counsel relied on the decision of the Hon’ble Supreme Cour Counsel relied on the decision of the Hon’ble Supreme Cour case of CIT v. Sun Engineering Works (P.) Ltd. [1992] 198 ITR 297 case of CIT v. Sun Engineering Works (P.) Ltd. [1992] 198 ITR 297 case of CIT v. Sun Engineering Works (P.) Ltd. [1992] 198 ITR 297 (SC) and submitted that (SC) and submitted that any decision of the Hon’ble Court is Hon’ble Court is only binding in respect of binding in respect of issues which are called upon to upon to decide and not on any other issues. He further referred to th issues. He further referred to the decision of the e decision of the Hon’ble Supreme Court in the case of ACIT v. A.K. Menon [1995] Hon’ble Supreme Court in the case of ACIT v. A.K. Menon [1995] Hon’ble Supreme Court in the case of ACIT v. A.K. Menon [1995] 215 ITR 364 (SC) to support that authority 215 ITR 364 (SC) to support that authority entrusted entrusted under the concerned statute/law alone concerned statute/law alone can determine and adjudicate the law determine and adjudicate the law or liability or consequence thereof and no othe or liability or consequence thereof and no other part r party can do so. In support of the proposition proposition, the Ld. Counsel also relied on the other the Ld. Counsel also relied on the other decisions of various courts. Referring to the decisions, the Ld. decisions of various courts. Referring to the decisions, the Ld. decisions of various courts. Referring to the decisions, the Ld. Counsel submitted that disallowance applying Explanation-1 below Counsel submitted that disallowance applying Explanation Counsel submitted that disallowance applying Explanation section 37(1) of the Act of the Act can be made only in respect of expenditure e only in respect of expenditure pertaining to act of the assessee pertaining to act of the assessee, which has been established to which has been established to be inviolation/infraction of the law or prohibited by the law by the inviolation/infraction of the law or prohibited by the law by the inviolation/infraction of the law or prohibited by the law by the relevant authority under the Government law. relevant authority under the Government law. The Ld. Counsel The Ld. Counsel submitted that in the case o submitted that in the case of the assessee no adverse action has f the assessee no adverse action has Galderma India Pvt. Ltd. 20 1987, 1988, 1964 & 1747/M/2019, 1987, 1988, 1964 & 1965/M/2020 been initiated against the assessee by the IMC under its been initiated against the assessee by the IMC under been initiated against the assessee by the IMC under Regulations or notification Regulations or notification. However, in our opinion However, in our opinion, how any expenditure incurred by the assessee will be in the prohibition of expenditure incurred by the assessee will be in the prohibition of expenditure incurred by the assessee will be in the prohibition of the law, has been discussed has been discussed in detail by the Hon’ble Supreme Court detail by the Hon’ble Supreme Court in the case of the Apex Laboratories Pvt. Ltd. (supra) which being in the case of the Apex Laboratories Pvt. Ltd. (supra) which being in the case of the Apex Laboratories Pvt. Ltd. (supra) which being the law, there is no further scope for the assessee to deviate here is no further scope for the assessee to deviate here is no further scope for the assessee to deviate from same and thus all the arguments raised in and thus all the arguments raised in this this respect, are accordingly dismissed. accordingly dismissed.

As far as the grounds of appeal of the Revenue in respect of As far as the grounds of appeal of the Revenue in respect of As far as the grounds of appeal of the Revenue in respect of deletion of the disallowan deletion of the disallowance for IADVL Rs.26,05,970/ ce for IADVL Rs.26,05,970/- ; IADVL Rs.15,67,771/- ; other conferences (Rs.30,79,341/ ; other conferences (Rs.30,79,341/ ; other conferences (Rs.30,79,341/-) and free samples Rs.1,08,39,500/ samples Rs.1,08,39,500/- totaling to Rs.1,80,92,582/ totaling to Rs.1,80,92,582/- is concerned the Ld. Counsel of the assessee submitted that IADVL expenses are the Ld. Counsel of the assessee submitted that IADVL expenses are the Ld. Counsel of the assessee submitted that IADVL expenses are for attending conference b for attending conference by the assessee which are organized by the y the assessee which are organized by the Indian Indian Association Association of of Dermatologist, Dermatologist, Venereologists Venereologists and and Leprologists (IADVL). (IADVL). The nature of the expenses The nature of the expenses is for stall participation fees, printing charges, stall charges and other stall charges and other expenses for showcasing for showcasing assessee’s product and same product and same were not for the benefit of the doctors or any medical practitioners. Regarding the benefit of the doctors or any medical practitioners. Regarding the benefit of the doctors or any medical practitioners. Regarding other conference expenses also similar submissions have been other conference expenses also similar submissions have been other conference expenses also similar submissions have been made by the Ld. Counsel. Regarding the free samples, the Ld. made by the Ld. Counsel. Regarding the free samples, the Ld. made by the Ld. Counsel. Regarding the free samples, the Ld. Counsel submitted that the Assessing Counsel submitted that the Assessing Officer has disallowed 50% of Officer has disallowed 50% of the total free samples distributed by the assessee on the premises total free samples distributed by the assessee on the premises total free samples distributed by the assessee on the premises that the assessee could not that the assessee could not quantify the amount of free samples the amount of free samples given to the doctors and stockiest. According to the Assessing given to the doctors and stockiest. According to the Assessing given to the doctors and stockiest. According to the Assessing Officer, free samples are in pr free samples are in prohibition by the IMC guidelines as ohibition by the IMC guidelines as same are given to medical medical practitioner/doctors for prescribing the medicine of assessee medicine of assesseeto patients. Before us, the Ld. Counsel of the . Before us, the Ld. Counsel of the Galderma India Pvt. Ltd. 23 1987, 1988, 1964 & 1747/M/2019, 1987, 1988, 1964 & 1965/M/2020 assessee submitted that Tribunal in the case of M/s Merk Limited assessee submitted that Tribunal in the case of M/s Merk Limited assessee submitted that Tribunal in the case of M/s Merk Limited (supra) has allowed th (supra) has allowed the expenses incurred on free samples not e expenses incurred on free samples not being in violation of the MCI guidelines. The relevant finding of the being in violation of the MCI guidelines. The relevant finding of the being in violation of the MCI guidelines. The relevant finding of the Tribunal (supra) on the issue is reproduced as under: on the issue is reproduced as under: on the issue is reproduced as under:

The Ld. Counsel of the assessee was asked to provide details The Ld. Counsel of the assessee was asked to provide details The Ld. Counsel of the assessee was asked to provide details of ledger statement of the expenditure incurred along with vouchers of the expenditure incurred along with vouchers of the expenditure incurred along with vouchers but no such details were provided before us for determining no such details were provided before us for determining no such details were provided before us for determining whether the expenses incurred are in violation of the ratio laid whether the expenses incurred are in violation of the ratio laid whether the expenses incurred are in violation of the ratio laid down in the case of Apex Laboratories Pvt. Ltd. (supra) and wn in the case of Apex Laboratories Pvt. Ltd. (supra) and wn in the case of Apex Laboratories Pvt. Ltd. (supra) and therefore, in the interest of the substantial justice, we feel it therefore, in the interest of the substantial justice therefore, in the interest of the substantial justice appropriate to restore this issue also to the file of the Assessing appropriate to restore this issue also to the file of the Assessing appropriate to restore this issue also to the file of the Assessing Officer with the direction of the assessee to produce detail of Officer with the direction of the assessee to produce detail Officer with the direction of the assessee to produce detail expenses along with vouchers and details of the medical expenses along with vouchers and details of the medical expenses along with vouchers and details of the medical practitioners or other persons or other persons etc. to whom benefit has been etc. to whom benefit has been extended by the assessee. The grounds of appeal of the Revenue are by the assessee. The grounds of appeal of the Revenue are by the assessee. The grounds of appeal of the Revenue are accordingly allowed for statistical purposes. accordingly allowed for statistical purposes.

The Ld. DR on the other hand submitted that decision of the The Ld. DR on the other hand submitted that decision of the The Ld. DR on the other hand submitted that decision of the Hon’ble Special Bench shall apply over the facts of the case of the Hon’ble Special Bench shall apply over the facts of the case of the Hon’ble Special Bench shall apply over the facts of the case of the assessee also and therefore, the Assessing Officer may be directed nd therefore, the Assessing Officer may be directed nd therefore, the Assessing Officer may be directed to follow the finding of the Special Bench on the issue. to follow the finding of the Special Bench on the issue. to follow the finding of the Special Bench on the issue.

We have heard rival submission of the parties on the issue We have heard rival submission of the parties on the issue We have heard rival submission of the parties on the issue-in- dispute and perused the relevant material on record. On the issue dispute and perused the relevant material on record. On the issue dispute and perused the relevant material on record. On the issue of rate of dividend distribution tax idend distribution tax, it has been informed by the Ld. informed by the Ld. Counsel of the assessee and matter has already been heard by the Counsel of the assessee and matter has already been heard by the Counsel of the assessee and matter has already been heard by the Special Bench of the Tribunal of the Tribunal and order is awaited. We also note and order is awaited. We also note that appeal of the assessee has already been restored to the file of that appeal of the assessee has already been restored to the file of that appeal of the assessee has already been restored to the file of the Assessing Officer he Assessing Officer on other grounds for deciding on other grounds for deciding afresh in the light of the decision of the Hon’ble Supreme Court in the case of light of the decision of the Hon’ble Supreme Court in the case of light of the decision of the Hon’ble Supreme Court in the case of Apex Laboratories Pvt. Ltd. (supra), therefore, we feel it appropriate Apex Laboratories Pvt. Ltd. (supra), therefore, we feel it appropriate Apex Laboratories Pvt. Ltd. (supra), therefore, we feel it appropriate to restore this issue of refund of excess dividend distribution to the to restore this issue of refund of excess dividend dis to restore this issue of refund of excess dividend dis file of the Ld. Assessing Officer file of the Ld. Assessing Officer to be decided following the following the outcome of the Special Bench, h, as and when pronounced.

In the result, the appeals of the assessee and Revenue are In the result, the appeals of the assessee and Revenue are In the result, the appeals of the assessee and Revenue are allowed for statistical purposes. allowed for statistical purposes.