Sales promotion Expenses by pharmaceutical companies

The Mumbai tribunal held that expenditures incurred in holding seminars, sponsoring lectures, sponsoring travel and accommodation for conferences, small gifts with logo and brand names and cost of samples given to medical practitioners are in the nature of sales promotion expenditure incurred for the business of the taxpayer. Since the Indian Medical Council regulations are not applicable to pharmaceutical companies, no violation of any law is committed; and therefore, the expenditure is not impaired by Explanation 1 to Section 37(1) of the Income-tax Act, 1961. The case is: PHL Pharma P Ltd. Read report on Sales promotion Expenses by pharmaceutical companies [PDF 335 KB] of KPMG