Referral Fees to Doctors and Nursing Homes Violative of Professional Ethics, Medical Diagnostics Company cannot Claim Deduction: ITAT [Read Order]
![Referral Fees to Doctors and Nursing Homes Violative of Professional Ethics, Medical Diagnostics Company cannot Claim Deduction: ITAT [Read Order]](https://www.taxscan.in/wp-content/uploads/2022/11/Doctors-Nursing-Violative-Ethics-Medical-Diagnostics-Claim-Deduction-ITAT-TAXSCAN.jpg "Referral Fees to Doctors and Nursing Homes Violative of Professional Ethics, Medical Diagnostics Company cannot Claim Deduction: ITAT [Read Order]")
The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the referral fee paid to the doctors and nursing home would not be allowable as deduction under section 37 of the Income Tax Act, 1961 as the same is violative of Medical Council (Professional Conducts, Etiquettes and Ethics) Regulation Act, 2002. The assessee, M/s Fidelity Diagnostics P. Ltd, is a company...
The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the referral fee paid to the doctors and nursing home would not be allowable as deduction under section 37 of the Income Tax Act, 1961 as the same is violative of Medical Council (Professional Conducts, Etiquettes and Ethics) Regulation Act, 2002.
The assessee, M/s Fidelity Diagnostics P. Ltd, is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of medical diagnostics services. The Return of Income for the assessment year 2015-16 was filed on 30.11.2015 declaring loss of Rs.1,97,90,141/-. While considering income tax return, the Assessing Officer disallowed a sum of Rs.99,79,768/- by holding that the appellant company had paid referral fees to doctors and nursing homes in violation of provisions of Medical Council (Professional Conducts, Etiquettes and Ethics) Regulation Act, 2002.
The Assessing Officer held that the referral fees paid to doctors and nursing home by the appellant company is not allowable since the same amount to violation of the provisions of Medical Council (Professional Conducts, Etiquettes and Ethics) Regulation Act, 2002. Therefore, squarely hit by the Explanation 1 to section 37 of the Act.
A bench of S. S. Godara (Judicial Member)and Shri Inturi Rama Rao (Accountant Member) observed tha “In the light of authoritative pronouncement of law by the Hon’ble Supreme Court on the issue on hand, we are of the considered opinion that referral fees paid to doctors and nursing home cannot be allowed as deduction while computing the business income of an assessee. Accordingly, we confirm the orders of the lower authorities. Thus, we do not find any merit in the ground of appeal filed by the appellant-assessee.”
Assessee was represented by Shri Sumit Jain.
To Read the full text of the Order CLICK HERE
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