ITAT recommends constitution of larger bench to decide allowability of freebies to medical professionals as a deduction

Last updated: 20 October 2021

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The Income Tax Appellate Tribunal (ITAT) in Mumbai has recommended forming a larger bench to settle whether expenses incurred by pharmaceutical companies on freebies for medical professionals are tax-deductible. This follows a case where the tax authority disallowed deductions for Macleods Pharmaceuticals Ltd., citing regulations prohibiting doctors from accepting such gifts. While the ITAT acknowledged the tax authority's arguments, it recognised conflicting decisions from other benches, necessitating a higher authority for a definitive ruling.

Court :
ITAT Mumbai

Brief :
The coordinate bench of the Hon’ble Income Tax Appellate Tribunal, Mumbai ("the ITAT Mumbai") in the case of Deputy Commissioner of Income Tax v. Macleods Pharmaceuticals Ltd. [ITA Nos. 5168 & 5169/Mum/2018 decided on October 14, 2021] has recommended constitution of a larger bench to decide on whether expenditure for providing freebies to medical professionals can be allowed as a deduction in accordance with Section 37(1) of the Income Tax Act, 1961 ("the Act").

Citation :
ITA Nos. 5168 & 5169/Mum/2018 decided on October 14, 2021

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