ITAT recommends constitution of larger bench to decide allowability of exp. on freebies to medical professionals

  • Blog|Income Tax|News|
  • |
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 18 October, 2021

ITAT recommends constitution of larger bench to decide allowability of exp. on freebies to medical professionals

Case Details: DCIT v. Macleods Pharmaceuticals Ltd - [2021] 131 154 (Mumbai - Trib.)

Judicial and Counsel Details

    • Pramod Kumar, Vice-President and Saktijit Dey, Judicial Member
    • Mamta Bansal, DR. for the Appellant. Ashok Bansal, CA for the Respondent.

Facts of the Case

The PHL Pharma decision [2017] 78 36 (Mumbai-Trib.) was the first decision dealing with the period post insertion of rule 6.8.1 in the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002, and the reasoning adopted therein is also followed by a large number of other coordinate bench decisions- including many decisions cited at the bar as well.

The Tribunal in PHL Pharma has ruled that expenditure incurred by Pharma Company for customer relationship management, key account management, gift articles, free medicine sample, advertisement, and sales promotion could not be considered freebies given to doctors. They were purely for brand recognition, allowable as business expenditure, and were not impaired by Explanation 1 to section 37(1).


However, conclusions arrived in the said decision do not reflect correct legal position. The same is the position with respect to many other co-ordinate bench decisions following said decision or following line of reasoning in said decision. Hence, the decision in PHL Pharma (supra) calls for reconsideration by a larger bench.
Accordingly, the constitution of a bench of three or more Members was to be recommended to consider the question as to whether or not an item of expenditure on account of freebies to medical professionals, which is hit by rule 6.8.1 of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 as amended from time-to-time, read with section 20A of Indian Medical Council Act, 1956, could be allowed as a deduction under section 37(1) read with Explanation thereto, in the hands of pharmaceutical companies.

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

2 thoughts on “ITAT recommends constitution of larger bench to decide allowability of exp. on freebies to medical professionals”

Leave a Reply

Your email address will not be published. Required fields are marked *

Everything on Tax and Corporate Laws of India

Subscribe to our weekly news letters!

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied