CONSTITUTION OF INDIA, 1950

--CBDT Circular Validity Circular No. 5/2012--The Medical Council of India in exercise of the powers vested in it under the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 imposed prohibition on any medical practitioner or their professional associates from accepting any gift, travel facility, hospitality, cash or monetary grant from any pharmaceutical and allied health sector industries. Circular No. 5/2012, dt. 1-8-2012 states that the claim of any expenses incurred in providing above mentioned or similar freebees in violation of the provisions of Indian Medical Council (Professional Conduct, Etiquete and Ethics) Regulations, 2002 shall be inadmissible under section 37(1) being an expense prohibited by the law. Assessee contended that the said circular goes beyond the section 37(1) itself and thus liable to be quashed. Held: The Explanation to section 37(1) makes it clear that any expenditure incurred by assessee for any purpose which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession. The circular which was totally in the with section 37(1) could not be said to be illegal. If the assessee satisfies assessing officer that the expenditure was not in violation of the regulations framed by the medical council then it may legitimately claim a deduction, but it was for the assessee to satisfy assessing officer that the expense was not in violation of the Medical Council Regulations

Income Tax Act, 1961 Section 119 & 37(1)