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“freebies to doctors”

Business ExpensesSection 37 ExplanationSection 37 Explanation50 judgments

The decision most relied on for freebies to doctors is Apex Laboratories Pvt. Ltd. v. CIT (135 Taxmann.com 286), cited in 148 judgments on BharatTax.

Leading authorities on freebies to doctors

Apex Laboratories Pvt. Ltd. v. CIT
135 Taxmann.com 286 · 2022 · Supreme Court
148
citing judgments

Expenditure incurred by pharmaceutical companies on freebies provided to medical practitioners is not deductible under Explanation 1 to Section 37(1) of the Income-tax Act, as such gifting is prohibited by the Medical Council Regulations, 2002. The court also held that what is directly prohibited by law cannot be indirectly evaded through contrivance.

CIT v. Kap Scan and Diagnostic Centre (P.) Ltd.
344 ITR 476 · 2012 · High Court
58
citing judgments

Payment of commission to doctors for referring patients to diagnostic centers or providing gifts, freebies, or hospitality to medical practitioners by pharmaceutical companies is against public policy and cannot be allowed as a business expenditure under Section 37(1). Demanding such benefits is unethical on the part of doctors, and paying them is equally unethical on the part of companies.

Dy. CIT v. PHL Pharma (P.) Ltd.
78 Taxmann.com 36 · 2017 · ITAT
38
citing judgments

Pharmaceutical companies are not subject to the Medical Council of India (MCI) guidelines concerning freebies given to doctors. Consequently, expenses on such freebies are not disallowed under Explanation 1 to Section 37(1) of the Income Tax Act.

1. M/s. Solvay Pharma India Ltd. v. PCIT
89 Taxmann.com 249 · 2018 · ITAT
12
citing judgments

Expenditure incurred by pharmaceutical companies providing gifts or freebies to doctors is not deductible if it violates MCI Regulations.

Judgments citing freebies to doctors

Asst Commissioner of Income Tax Cent.Cir 7(2), Mumbai, Mumabi vs. Hegde and Hegde Pharmaceutica LLP, Mumbai

In the result, all the appeals of the Revenue and assessee are

ITA 2434/MUM/2024[2020-21]Status: DisposedITAT Mumbai08 Nov 2024AY 2020-21

Bench: Shri B.R. Baskaran

Section 131Section 133ASection 37(1)

books and periodicals provided to the Medical representatives and various students and not to Doctors. As such, the expenditure cannot be treated as freebies to doctors and incurred in contravention of the MCI Guidelines. Consequently, the expenditure cannot be disallowed u/s 37(1) of the Act. The appellant has identified ... doctors. Further, the appellant has also treated all such expenses incurred on behalf of the doctors, except for the conference registration charges, as freebies to doctors and covered by the MCI Guidelines and the judgement of Hon'ble Supreme Court in the case of Apex Laboratories. I am not inclined

Asst Commissioner of Income Tax Cent Cir. 7(2), Mumbai vs. Hegde and Hegde Pharmaceutica LLP, Mumbai

In the result, all the appeals of the Revenue and assessee are dismissed

ITA 2433/MUM/2024[2021-22]Status: DisposedITAT Mumbai08 Nov 2024AY 2021-22

Bench: Shri B.R. Baskaran & Shri Sunil Kumar Singh

For Appellant: Shri Jaiprakash Bairagra, a/wFor Respondent: Shri Biswanath Das, CIT-DR
Section 131Section 133ASection 37(1)

books and periodicals provided to the Medical representatives and various students and not to Doctors. As such, the expenditure cannot be treated as freebies to doctors and incurred in contravention of the MCI Guidelines. Consequently, the expenditure cannot be disallowed u/s 37(1) of the Act. The appellant has identified ... doctors. Further, the appellant has also treated all such expenses incurred on behalf of the doctors, except for the conference registration charges, as freebies to doctors and covered by the MCI Guidelines and the judgement of Hon'ble Supreme Court in the case of Apex Laboratories. I am not inclined

Asst Commissioner of Income Tax Cent Cir 7(2) Mumbai, Mumbai vs. Hegde and Hegde Pharmaceutica LLP, Mumbai

In the result, all the appeals of the Revenue and assessee are

ITA 2432/MUM/2024[2022-23]Status: DisposedITAT Mumbai08 Nov 2024AY 2022-23

Bench: Shri B.R. Baskaran

Section 131Section 133ASection 37(1)

books and periodicals provided to the Medical representatives and various students and not to Doctors. As such, the expenditure cannot be treated as freebies to doctors and incurred in contravention of the MCI Guidelines. Consequently, the expenditure cannot be disallowed u/s 37(1) of the Act. The appellant has identified ... doctors. Further, the appellant has also treated all such expenses incurred on behalf of the doctors, except for the conference registration charges, as freebies to doctors and covered by the MCI Guidelines and the judgement of Hon'ble Supreme Court in the case of Apex Laboratories. I am not inclined

Hegde and Hegde Pharmaceutica LLP, Kemps Corner vs. DCIT Central Circle-7(2), New Marine Lines

In the result, all the appeals of the Revenue and assessee are

ITA 1895/MUM/2024[2016-2017]Status: DisposedITAT Mumbai08 Nov 2024AY 2016-2017

Bench: Shri B.R. Baskaran

Section 131Section 133ASection 37(1)

books and periodicals provided to the Medical representatives and various students and not to Doctors. As such, the expenditure cannot be treated as freebies to doctors and incurred in contravention of the MCI Guidelines. Consequently, the expenditure cannot be disallowed u/s 37(1) of the Act. The appellant has identified ... doctors. Further, the appellant has also treated all such expenses incurred on behalf of the doctors, except for the conference registration charges, as freebies to doctors and covered by the MCI Guidelines and the judgement of Hon'ble Supreme Court in the case of Apex Laboratories. I am not inclined

Hegde and Hegde Pharmaceutica LLP, Kemps Corner vs. DCIT Central Circle-7(2), New Marine Lines

In the result, all the appeals of the Revenue and assessee are

ITA 1894/MUM/2024[2017-2018]Status: DisposedITAT Mumbai08 Nov 2024AY 2017-2018

Bench: Shri B.R. Baskaran

Section 131Section 133ASection 37(1)

books and periodicals provided to the Medical representatives and various students and not to Doctors. As such, the expenditure cannot be treated as freebies to doctors and incurred in contravention of the MCI Guidelines. Consequently, the expenditure cannot be disallowed u/s 37(1) of the Act. The appellant has identified ... doctors. Further, the appellant has also treated all such expenses incurred on behalf of the doctors, except for the conference registration charges, as freebies to doctors and covered by the MCI Guidelines and the judgement of Hon'ble Supreme Court in the case of Apex Laboratories. I am not inclined

Hegde and Hegde Pharmaceutica LLP, Kemps Corner vs. DCIT Central Circle-7(2), New Marine Lines

In the result, all the appeals of the Revenue and assessee are

ITA 1893/MUM/2024[2018-2019]Status: DisposedITAT Mumbai08 Nov 2024AY 2018-2019

Bench: Shri B.R. Baskaran

Section 131Section 133ASection 37(1)

books and periodicals provided to the Medical representatives and various students and not to Doctors. As such, the expenditure cannot be treated as freebies to doctors and incurred in contravention of the MCI Guidelines. Consequently, the expenditure cannot be disallowed u/s 37(1) of the Act. The appellant has identified ... doctors. Further, the appellant has also treated all such expenses incurred on behalf of the doctors, except for the conference registration charges, as freebies to doctors and covered by the MCI Guidelines and the judgement of Hon'ble Supreme Court in the case of Apex Laboratories. I am not inclined

Hegde and Hegde Pharmaceutica LLP, Kemps Corner vs. DCIT Central Circle- 7(2), New Marine Lines

In the result, all the appeals of the Revenue and assessee are dismissed

ITA 1892/MUM/2024[2019-2020]Status: DisposedITAT Mumbai08 Nov 2024AY 2019-2020

Bench: Shri B.R. Baskaran & Shri Sunil Kumar Singh

For Appellant: Shri Jaiprakash Bairagra, a/wFor Respondent: Shri Biswanath Das, CIT-DR
Section 131Section 133ASection 37(1)

books and periodicals provided to the Medical representatives and various students and not to Doctors. As such, the expenditure cannot be treated as freebies to doctors and incurred in contravention of the MCI Guidelines. Consequently, the expenditure cannot be disallowed u/s 37(1) of the Act. The appellant has identified ... doctors. Further, the appellant has also treated all such expenses incurred on behalf of the doctors, except for the conference registration charges, as freebies to doctors and covered by the MCI Guidelines and the judgement of Hon'ble Supreme Court in the case of Apex Laboratories. I am not inclined

Hegde and Hegde Pharmaceutica LLP, Kemps Corner vs. DCIT Central Circle- 7(2), New Marine Lines

In the result, all the appeals of the Revenue and assessee are

ITA 1891/MUM/2024[2020-2021]Status: DisposedITAT Mumbai08 Nov 2024AY 2020-2021

Bench: Shri B.R. Baskaran

Section 131Section 133ASection 37(1)

books and periodicals provided to the Medical representatives and various students and not to Doctors. As such, the expenditure cannot be treated as freebies to doctors and incurred in contravention of the MCI Guidelines. Consequently, the expenditure cannot be disallowed u/s 37(1) of the Act. The appellant has identified ... doctors. Further, the appellant has also treated all such expenses incurred on behalf of the doctors, except for the conference registration charges, as freebies to doctors and covered by the MCI Guidelines and the judgement of Hon'ble Supreme Court in the case of Apex Laboratories. I am not inclined

Hegde and Hegde Pharmaceutica LLP, Kemps Corner vs. DCIT Central Circle - 7(2), New Marine Lines

In the result, all the appeals of the Revenue and assessee are

ITA 1890/MUM/2024[2021-2022]Status: DisposedITAT Mumbai08 Nov 2024AY 2021-2022

Bench: Shri B.R. Baskaran

Section 131Section 133ASection 37(1)

books and periodicals provided to the Medical representatives and various students and not to Doctors. As such, the expenditure cannot be treated as freebies to doctors and incurred in contravention of the MCI Guidelines. Consequently, the expenditure cannot be disallowed u/s 37(1) of the Act. The appellant has identified ... doctors. Further, the appellant has also treated all such expenses incurred on behalf of the doctors, except for the conference registration charges, as freebies to doctors and covered by the MCI Guidelines and the judgement of Hon'ble Supreme Court in the case of Apex Laboratories. I am not inclined

Hegde and Hegde Pharmaceutica LLP, Kemps Corner vs. DCIT Central Circle- 7(2), New Marine Lines

In the result, all the appeals of the Revenue and assessee are dismissed

ITA 1889/MUM/2024[2022-2023]Status: DisposedITAT Mumbai08 Nov 2024AY 2022-2023

Bench: Shri B.R. Baskaran & Shri Sunil Kumar Singh

For Appellant: Shri Jaiprakash Bairagra, a/wFor Respondent: Shri Biswanath Das, CIT-DR
Section 131Section 133ASection 37(1)

books and periodicals provided to the Medical representatives and various students and not to Doctors. As such, the expenditure cannot be treated as freebies to doctors and incurred in contravention of the MCI Guidelines. Consequently, the expenditure cannot be disallowed u/s 37(1) of the Act. The appellant has identified ... doctors. Further, the appellant has also treated all such expenses incurred on behalf of the doctors, except for the conference registration charges, as freebies to doctors and covered by the MCI Guidelines and the judgement of Hon'ble Supreme Court in the case of Apex Laboratories. I am not inclined

The Dy. Commissioner of Income Tax, Circle-2(1)(1), Baroda vs. M/S. Sun Pharma Laboratories Ltd., Mumbai

In the result, the Department’s appeal is partly allowed

ITA 741/AHD/2019[2015-16]Status: DisposedITAT Ahmedabad09 Oct 2024AY 2015-16

Bench: Smt. Annapurna Gupta (Accountant Member), Shri T.R. Senthil Kumar (Judicial Member)

Section 115JSection 143(3)Section 14ASection 36(1)(va)Section 37(1)Section 80Section 80I

Ground No. 4 in Departmental Appeal also relates to disallowance of business/ conference fee and sponsorship expenses under the gift and freebies to doctors of Rs.2,26,07,758/-. As both the grounds of appeal are interlinked with each other, they are adjudicated together. 5.1. The Ld AO has observed ... record and given our thoughtful consideration. The assessee has claimed accommodation, business promotion and conference expenses incurred, which are mainly gifts and freebies to doctors. While passing the assessment order, the Ld. AO has verified the ledger account of such expenditure and found that I.T.A Nos.712 & 741 /Ahd/2019

Sun Pharma Laboratories Ltd., Mumbai vs. The Dy. Commissioner of Income Tax, Circle-2(1)(1), Baroda

In the result, the Department’s appeal is partly allowed

ITA 712/AHD/2019[2015-16]Status: DisposedITAT Ahmedabad09 Oct 2024AY 2015-16

Bench: Smt. Annapurna Gupta (Accountant Member), Shri T.R. Senthil Kumar (Judicial Member)

Section 115JSection 143(3)Section 14ASection 36(1)(va)Section 37(1)Section 80Section 80I

Ground No. 4 in Departmental Appeal also relates to disallowance of business/ conference fee and sponsorship expenses under the gift and freebies to doctors of Rs.2,26,07,758/-. As both the grounds of appeal are interlinked with each other, they are adjudicated together. 5.1. The Ld AO has observed ... record and given our thoughtful consideration. The assessee has claimed accommodation, business promotion and conference expenses incurred, which are mainly gifts and freebies to doctors. While passing the assessment order, the Ld. AO has verified the ledger account of such expenditure and found that I.T.A Nos.712 & 741 /Ahd/2019

Kepler Healthcare Private Limited, Ahmedabad vs. The Pr. CIT-1, Ahmedabad

In the result, the appeal of the assessee is allowed

ITA 565/AHD/2024[2018-19]Status: DisposedITAT Ahmedabad12 Jun 2024AY 2018-19

Bench: Ms. Suchitra R. Kamble & Shri Narendra Prasad Sinhaassessment Year : 2018-19 Kepler Healthcare Private Limited, The Pr. Commissioner Of C/O. M S Chhajed & Co., Ca, Vs Income Tax-1, Ahmedabad “Kamal Shanti, Nr. Sardar Patel Statute, Ahmedabad-380014 Pan : Aafck 1130 R अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) Assessee By : Shri M.S. Chhajed, Ar Revenue By : Shri Kamlesh Makwana, Cit-Dr सुनवाई की तारीख/Date Of Hearing : 30/05/2024 घोषणा की तारीख /Date Of Pronouncement : 12/06/2024

For Appellant: Shri M.S. Chhajed, ARFor Respondent: Shri Kamlesh Makwana, CIT-DR
Section 143(3)Section 263

Regulations, applicable to all medical practitioners (including doctors in private practice), was introduced from December 14, 2009. Thus, pharmaceutical companies' gifting freebies to doctors is clearly 'prohibited by law', and not allowed to be claimed as a deduction under Section 37(1) of the Income Tax Act (as business expenditure

Dy.CIT. CC.5(2) Cent. RG. -5, Mumbai vs. M/S. Usv Pvt. Ltd, Mumbai

In the result, both the appeals of the Revenue are partly allowed for statistical purposes

ITA 2574/MUM/2021[2012-13]Status: DisposedITAT Mumbai01 Apr 2024AY 2012-13

Bench: Shri Aby T. Varkey, Jm & Shri Gagan Goyal, Am आयकर अपील सं/ I.T.A. No.2574/Mum/2021 (निर्धारण वर्ा / Assessment Year: 2012-13) & आयकर अपील सं/ I.T.A. No.2356/Mum/2021 (निर्धारण वर्ा / Assessment Year: 2013-14) Dcit-Cc-5(2) बिधम/ M/S. Usv Pvt. Ltd. Central Range-5, Room Arvind Vithal Gandhi Vs. No.1908, Air India Building, Chowk, Govandi, Nariman Point, Mumbai- Mumbai-400088. 400021. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aaacu1366N (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Paras Savla Shri Pratik Poddar Revenue By: Smt Mahita Nair (Sr. Dr) सुनवाई की तारीख / Date Of Hearing: 09/02/2024 घोषणा की तारीख /Date Of Pronouncement: 01/04/2024 आदेश / O R D E R Per Aby T. Varkey, Jm: These Are Appeals Preferred By The Revenue Against The Order Of The Ld. Commissioner Of Income Tax (Appeals), [Hereinafter “Ld. Cit(A)], Mumbai Dated 31.08.2020 & Order Dated 10.03.2021 For The Assessment Year 2012-13 & Ay. 2013-14 Respectively. Since Issues In Both The Years Were The Same, Both These Appeals Were Heard Together. Both The Parties Also Agreed That There Is No Change Of Facts Or Position In Law Across Both These Years & Therefore Argued Them Together Raising Similar Arguments On These Issues. We Accordingly Dispose Both The Appeals By This Common Order.

For Appellant: Shri Paras SavlaFor Respondent: Smt Mahita Nair (Sr. DR)
Section 115JSection 92C

assessment is noted to have identified sales promotion expenses to the tune of Rs.37,31,52,810/- being in the nature of freebies to doctors which according to him was in violation of Circular no. 05/2012 dated 1 August 2012 read with Indian Medical Council (Professional Conduct, Etiquette and Ethics ... under this Act or under any other law for the time being in force". According to us therefore the issue regarding quantification of freebies to doctors out of the total sales promotion expenses had attained finality consequent to the order of the ITSC and that the same

Dy.CIT C C 5(2) Central RG-5, Mumbai vs. M/S. Usv Private Ltd, Mumbai

In the result, both the appeals of the Revenue are partly allowed for statistical purposes

ITA 2356/MUM/2021[2013-14]Status: DisposedITAT Mumbai01 Apr 2024AY 2013-14

Bench: Shri Aby T. Varkey, Jm & Shri Gagan Goyal, Am आयकर अपील सं/ I.T.A. No.2574/Mum/2021 (निर्धारण वर्ा / Assessment Year: 2012-13) & आयकर अपील सं/ I.T.A. No.2356/Mum/2021 (निर्धारण वर्ा / Assessment Year: 2013-14) Dcit-Cc-5(2) बिधम/ M/S. Usv Pvt. Ltd. Central Range-5, Room Arvind Vithal Gandhi Vs. No.1908, Air India Building, Chowk, Govandi, Nariman Point, Mumbai- Mumbai-400088. 400021. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aaacu1366N (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Paras Savla Shri Pratik Poddar Revenue By: Smt Mahita Nair (Sr. Dr) सुनवाई की तारीख / Date Of Hearing: 09/02/2024 घोषणा की तारीख /Date Of Pronouncement: 01/04/2024 आदेश / O R D E R Per Aby T. Varkey, Jm: These Are Appeals Preferred By The Revenue Against The Order Of The Ld. Commissioner Of Income Tax (Appeals), [Hereinafter “Ld. Cit(A)], Mumbai Dated 31.08.2020 & Order Dated 10.03.2021 For The Assessment Year 2012-13 & Ay. 2013-14 Respectively. Since Issues In Both The Years Were The Same, Both These Appeals Were Heard Together. Both The Parties Also Agreed That There Is No Change Of Facts Or Position In Law Across Both These Years & Therefore Argued Them Together Raising Similar Arguments On These Issues. We Accordingly Dispose Both The Appeals By This Common Order.

For Appellant: Shri Paras SavlaFor Respondent: Smt Mahita Nair (Sr. DR)
Section 115JSection 92C

assessment is noted to have identified sales promotion expenses to the tune of Rs.37,31,52,810/- being in the nature of freebies to doctors which according to him was in violation of Circular no. 05/2012 dated 1 August 2012 read with Indian Medical Council (Professional Conduct, Etiquette and Ethics ... under this Act or under any other law for the time being in force". According to us therefore the issue regarding quantification of freebies to doctors out of the total sales promotion expenses had attained finality consequent to the order of the ITSC and that the same

Torrent Pharmaceuticals Ltd., Ahmedabad vs. ACIT, Circle-4(1)(2), Ahmedabad

In the result appeal of the Revenue is hereby partly allowed

ITA 1172/AHD/2019[2015-16]Status: DisposedITAT Ahmedabad26 Feb 2024AY 2015-16

Bench: Shri Waseem Ahmed & Ms. Madhumita Roy

For Appellant: Shri Vartik Choksi, With Shri DhrunalBhatt, ARsFor Respondent: Shri Ritesh Parmar, CIT-DR
Section 143(3)Section 14ASection 35Section 43BSection 80

circular No. 05/2012 dated 01-08-2012 clarified that expenditure incurred by the pharmaceutical or allied health sector industries in the nature of freebie to doctors is in violation of above mentioned regulation of MCI and therefore, such expenditure will not be allowed as deduction to the pharmaceutical or allied ... which will lead to suffering of public at large. The relevant extract of the judgment is extracted below: 33. Thus, pharmaceutical companies' gifting freebies to doctors, etc. is clearly "prohibited by law", and not allowed to be claimed as a deduction under section 37(1). Doing so would wholly undermine

M/S Glenmark Pharmaceuticals Ltd., Mumbai vs. DCIT (Ltu)-1, Mumbai

In the result, the appeal filed by the assessee is partly allowed

ITA 575/MUM/2020[2014-15]Status: DisposedITAT Mumbai01 Feb 2024AY 2014-15

Bench: Shri B.R. Baskaran (Am) & Shri Rahul Chaudhary (Jm)

Section 144ASection 32ASection 35Section 37(1)Section 80I

these three units. 11. The next issue urged by the assessee relates to the disallowance of Sales Promotion Expenses in the form of freebies to doctors and medical professionals u/s 37(1) of the Act. The assessee had claimed sales promotion expenses of Rs.392.87 crores. The AO proposed to disallow

Heart Foundation of India, Mumbai vs. Principle Commissioner of Income Tax-Central, Pune

The appeal of the assessee is allowed

ITA 1524/MUM/2023[2023-24]Status: PendingITAT Mumbai27 Jul 2023AY 2023-24

Bench: Vikas Awasthy () & Ms. Padmavathy S. ()

Section 12ASection 143(3)

section 12AB(4) of the Act. It was alleged in the said reference that the assessee trust as provided freebies to doctors which are in violation of the Indian Medical Council (Professional Conduct & Ethics) Regulations, 2002. The assessee was issued notice under section 12AB of the Act by the PCIT

Asst Comm of Income Tax-2(2)(1), Mumbai vs. M/S. Medley Pharmaceuticals Ltd., Mumbai

In the result, all the appeals of the assessee are partly allowed and all the appeals of the Revenue are dismissed

ITA 306/MUM/2023[2018-19]Status: HeardITAT Mumbai28 Jun 2023AY 2018-19
Section 14ASection 33Section 35Section 80I

Medley Pharmaceuticals Ltd  Assessee manufactures and sells pharma products which can be sold only when it is prescribed by medical practitioners.  Giving of freebies to doctors and its admissibility of such expense can be determined by the law of the land..  MCI in exercise of powers confirmed by section

Asst Comm of Income Tax-2(2)(1), Mumbai vs. M/S. Medley Pharmaceuticals Ltd., Mumbai

In the result, all the appeals of the assessee are partly allowed and all the appeals of the Revenue are dismissed

ITA 305/MUM/2023[2013-14]Status: DisposedITAT Mumbai28 Jun 2023AY 2013-14
Section 14ASection 33Section 35Section 80I

Medley Pharmaceuticals Ltd  Assessee manufactures and sells pharma products which can be sold only when it is prescribed by medical practitioners.  Giving of freebies to doctors and its admissibility of such expense can be determined by the law of the land..  MCI in exercise of powers confirmed by section