ITAT allows Expenses incurred on Seminar conducted Abroad for Medical Practitioners funded by Pharmaceuticals Company [Read Order]

The Income Tax Appellate Tribunal ( ITAT ), Ahmedabad has recently allowed expenses incurred by a Hospital for conducting a seminar for the medical practitioners abroad that too with the financial aid from the Pharmaceutical companies.

The assessee is a super specialty cardiac hospital operating in the city of Vadodara and Surat providing cardiac treatment to patients. The company regularly organizes academic conferences for doctors known as “CARDCON” i.e. Cardiac Conference. For such purchases, the company receives contributions from pharmaceutical companies. The assessee debited an amount of Rs.28,36,700/- under the head ‘travelling expenses’ which was found as expenses against the seminar arranged at Hong Kong for the medical practitioners.

While completing the assessment, the Assessing Officer made an addition of Rs. 28,36,700/- and held that the assessee could not explain the purpose and subsequent outcome of the seminar, neither the assessee could show that the expenses were wholly and exclusively for the business purpose.

In 2009, the then Medical Council of India (MCI) amended the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002, prohibiting doctors and their associations from taking any gift, travel facility, hospitality, cash or monetary grant from the pharmaceutical and allied health sector industries.

Before the Tribunal, the assessee claimed that the Indian Medical Council (Professional Conduct, and Etiquette & Ethics) Regulation 2002 is not binding upon the assessee company.

The Tribunal noted that in Max Hospital, Pitampura vs. Medical Council Of India, the Delhi High Court held that the said regulations are not applicable to the hospitals.

Relying on the above decision, the Tribunal allowed the claim of the assessee and held that “From the above judgments it appears that the CBDT Circular issued on 01.08.2012 without any retrospective effect not applicable to the instant case of the assessee for AY 2012-13 nor the MCI guidelines which was relied upon by the Revenue while rejecting the claim of the appellant company has any manner of application. The seminar conducted in abroad by the assessee company with the financial aid of the pharmaceuticals company does not give any scope to treat the same for the purpose other than the business of the assessee company so far it relates to the medical practitioners. Taking into consideration the entire aspects of the matter, we are of the considered opinion that the assessee’s claim towards traveling expenses is justified.”