ZUVENTUS HEALTHCARE LTD,,PUNE vs. DEPUTY COMMISSIONER OF INCOME TAX,, PUNE

This assessee’s appeal for A.Y. 2012-13 is directed against the CIT(A) - 6, Pune’s order dated 28/04/2017 in case No. PN/CIT(A)-V/DCIT Cir- 10/716/ 2014-15 involving proceeding u/s. 143(3) of the Income Tax Act, 1961 ; in short "the Act. Heard both the parties. Case file perused.

The assessee’s former substantive ground raised in the instant appeal seeks to reverse both the lower authorities action disallowing sales and marketing expenses of Rs.1,46,44,411/- incurred as alleged freebies to doctors. We note that CIT(A) detailed discussion has upheld full action to this effect in light of the Indian Medical Counsel Regulations 2002 read with CBDT circular No.5 of 2012 dated 01.08.2012 clarifying such an expenditure as not allowable u/s. 37(1) of the Act.

We make it clear the assessee has not even disputed the impugned freebies offered to doctors/medical practitioners which had been claimed in the nature of sales and marketing expenditure. That being the case, we quote hon’ble apex court’s latest decision [2022] 135 taxmann.com 286 (SC) Apex Laboratory P. Ltd. Vs. DCIT settling the law in department’s favour. We thus affirm the impugned disallowance. The assessee fails in its former substantive grievance.

Next comes section 14A r.w. rule 8D of the Income-Tax Rules,1962 disallowance of Rs.31,40,301/- made under both the lower proceedings. Suffice to say, the assessee has not derived any exempt income in the relevant previous year. Hon’ble jurisdictional high court’s recent decision in Principal CIT vs. Kohinoor Project (P) Ltd.,[2020] 121 taxmann.com 177(Bom) holds that the impugned disallowance does not apply in absence of any exempt income derived in the relevant previous year. We therefore adopt the very reasoning mutatis mutandis to delete the impugned disallowance.

This assessee’s appeal is partly allowed in above terms. Order pronounced in the Open Court on this 6th day of May, 2022.