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Free foreign trips for Doctors by pharma cos allowed: IT Tribunal

Free foreign trips for Doctors by pharma cos allowed: IT Tribunal

Code of conduct laid down by the Medical Council of India (MCI) in its regulations which debar or limit freebies are meant to be followed by the medical fraternity alone, stated the tribunal 

IT tribunal allows Rs 23 crore relief to pharma Co giving freebies to doctors

Mumbai: In a major turnaround from an earlier decision of not allowing money spent by pharma on foreign trips of doctors as expense, the Income Tax Appellate Tribunal, was recently seen allowing a pharma company to take tax benefits against funds that were spent giving freebies to medical practitioners.

The current case related to that of PHL pharma and the IT appellate tribunal was seen allowing the firm to deduct a total sum of Rs 23 crores which were spent towards various freebies for medical practitioners including  sponsoring trips for doctors for medical seminars, providing them with costly medical journals, and buying them stationery and pens bearing the logo of the pharma company as well as giving them free samples.

This is indeed a major turnaround from an earlier decision of the same tribunal, which disallowed a pharma company, Liva healthcare to claim expenses worth Rs 76 lakhs that were made towards foreign trips of doctors and their spouses in its statements.

Read more at Medical Dialogues: Money spent on foreign trips of doctors cannot be claimed as expense: IT Tribunal 

In the recent decision however, the tribunal allowed the concerned company to claim the deductions. The more than 34 pages order examines various legal postitions and issues, while also distinguishing with the facts of the case of the earlier order. As per a TOI report, two takeaways that emerged from the said order include

  • First, the ITAT held that the code of conduct laid down by the Medical Council of India (MCI) in its regulations which debar or limit freebies are meant to be followed by the medical fraternity alone. It does not cover pharma companies in any manner. A reference was also drawn by the ITAT to a Delhi high court decision, which made a similar observations
  • Second, the ITAT also examined a circular dated August 1, 2012, issued by the Central Board of Direct Taxes (CBDT), which said that any expense in providing freebies in violation of the MCI’s code shall not be allowed as a business deduction. The ITAT in its decision pointed out that as the code of conduct did not cover the pharma company, the expenditure of Rs 23 crore did not violate this code. It also noted that since the expenses were incured by the company in 2009-10, the said circular of the CBDT could not be applied retrospectively.

Source: with inputs
12 comment(s) on Free foreign trips for Doctors by pharma cos allowed: IT Tribunal

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  1. The Indian System of justice is a JOKE.
    WHY doesn\’t the Govt investigate the assets of Judges passing such judgements?
    \”Any expense in providing freebies in violation of the MCI’s code shall not be allowed as a business deduction. The ITAT in its decision pointed out that as the code of conduct did not cover the pharma companies\”!!!. Even a moron knows who else will give freebies to Drs?
    And since the code ONLY covers Drs, that means it will be disallowed only when the Dr gives out freebies to himself!

  2. the ITAT also examined a circular dated August 1, 2012, issued by the Central Board of Direct Taxes (CBDT), which said that any expense in providing freebies in violation of the MCI’s code shall not be allowed as a business deduction.
    It also noted that since the expenses were incurred by the company in 2009-10, the said circular of the CBDT…
    That settles the matter.

  3. Every profession has perks…Engineers/corporates/MBAs get huge bonus plus lavish dinners and stays in 5 star hotels after any deal is struck.Same goes for every business/profession.But only doctors are targeted.

  4. not good in practice in long run.

  5. user
    Dilip Keshav Rane January 18, 2017, 6:02 pm

    Doctors from different parts of the country are taken for educational conferences brings national integration and educational enlightenment along with interaction with doctors of various regions and even foreign experts is definitely a progressive trend which should not be objected. Foolish arguments of increase in prices will be detrimental is wrong as there is govt. machinery to monitor and people are not fools that the will buy a drug which does not suit them.

  6. It is good if it is within the State ..What is need for a tropical doctor to go and attend a meeting in the polar region/in U.K/ Canada, if he has to study about Malaria ?? with some company sponsoring him/her and adding that expense on poor patients ??