TaxTonic Session: Freebies Not Free Anymore – Decoding Impact of SC Ruling in Apex Labs!
- Year of Publication: 2022
- ISBN: 0
90 minutes
Episode Background:
'TaxTonic', a new 'subscriber only' thought leadership series, is Taxsutra's endeavour to consistently deliver top notch technical content to it's readers. The labyrinth of tax rulings on convoluted transactions keeps the world of taxation unpredictable and ever-evolving. This series will feature engrossing presentations, incisive analyses and a deep-dive by the tax experts on burning issues & controversies. So, gear up for a 'tonic' to chisel your tax mind and challenge your wit.
Speaker:
Moderator:
Mr. Sachin Sastakar (Chartered Accountant)
What shall the episode cover?
India’s jurisprudence in the realm of public law has numerous instances of inter-ministerial conflict. Au contraire, the Apex Court judgment in Apex Laboratories case is based on the principle "one arm of the law cannot be utilised to defeat the other arm of law". The Hon’ble Supreme Court rejected Apex Labs' claim for tax deduction of expenditure incurred on “Freebies” that became synonymous to relationship between pharma industry and doctors. The time immemorial wisdom enshrined in the latin maxim ex dolo malo non oritur actio – no court will lend its aid to a party that roots its cause of action in an immoral or illegal act – came to rescue the Revenue on the heavily litigated issue of allowability of freebies as business expenditure under Section 37(1). The Supreme Court also held that the interpretation of different statutes shall be coherent and not self-defeating and decided the issue in favour of the Revenue. It is interesting to note that the ruling was delivered after the Hon’ble Finance Minister presented the Union Budget 2022 wherein Explanation 3 was proposed to be inserted in Section 37(1) to amply clarify the meaning of 'expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law'.
In the next episode of TaxTonic, Taxsutra brings to you a discussion to unfold the complexities surrounding the claim of Freebies as business expenditure.
The discussion is focused on:
1. Analysis of the SC ruling, CBDT Circular and insertion of Explanation 3 to Section 37(1)
2. Impact on pharma and other industries’ tax liability
3. Ripple effect on marketing and business development related expenses such as gifts, conference expenses, incentives etc.
4. Consequences on claim of penalty, fine and compounding fee as business expenditure
5. Section 194R
6. Probable revisionary and reassessment proceedings pursuant to SC ruling
Taxsutra is considered the most credible source of tax news in the tax fraternity. What started as a fledgling start-up has now become a leading brand in the tax world not only in India, but across the globe. Taxsutra's diverse customer set includes Fortune 500 Companies, large Indian Business Groups, Global Conglomerates, Tax Judges, IRS Officers, CBDT, Tax Lawyers & thousands of tax practitioners.
Taxsutra suite of portals :
1. Real time tax news & analysis for Corporate Tax (www.taxsutra.com/dt)
2. Transfer Pricing Portal (www.taxsutra.com/tp)
3. GST and Central Indirect Taxes Portals (www.taxsutra.com/gst - www.idt.taxsutra.com)
4. "Taxsutra Database" - Powerful Online Direct Tax Reference and Search Tool (www.database.taxsutra.com)
5. LawStreetIndia (LSI) (www.lawstreetindia.com) contains sub-modules on Company law, Securities law (SEBI/SAT), FEMA, IP laws & Competition Law
6. Taxsutra Accounting Standards portal (Ind-AS) (www.greentick.taxsutra.com)
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- Year of Publication: 2022
- ISBN: 0
90 minutes
Episode Background:
'TaxTonic', a new 'subscriber only' thought leadership series, is Taxsutra's endeavour to consistently deliver top notch technical content to it's readers. The labyrinth of tax rulings on convoluted transactions keeps the world of taxation unpredictable and ever-evolving. This series will feature engrossing presentations, incisive analyses and a deep-dive by the tax experts on burning issues & controversies. So, gear up for a 'tonic' to chisel your tax mind and challenge your wit.
Speaker:
Moderator:
Mr. Sachin Sastakar (Chartered Accountant)
What shall the episode cover?
India’s jurisprudence in the realm of public law has numerous instances of inter-ministerial conflict. Au contraire, the Apex Court judgment in Apex Laboratories case is based on the principle "one arm of the law cannot be utilised to defeat the other arm of law". The Hon’ble Supreme Court rejected Apex Labs' claim for tax deduction of expenditure incurred on “Freebies” that became synonymous to relationship between pharma industry and doctors. The time immemorial wisdom enshrined in the latin maxim ex dolo malo non oritur actio – no court will lend its aid to a party that roots its cause of action in an immoral or illegal act – came to rescue the Revenue on the heavily litigated issue of allowability of freebies as business expenditure under Section 37(1). The Supreme Court also held that the interpretation of different statutes shall be coherent and not self-defeating and decided the issue in favour of the Revenue. It is interesting to note that the ruling was delivered after the Hon’ble Finance Minister presented the Union Budget 2022 wherein Explanation 3 was proposed to be inserted in Section 37(1) to amply clarify the meaning of 'expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law'.
In the next episode of TaxTonic, Taxsutra brings to you a discussion to unfold the complexities surrounding the claim of Freebies as business expenditure.
The discussion is focused on:
1. Analysis of the SC ruling, CBDT Circular and insertion of Explanation 3 to Section 37(1)
2. Impact on pharma and other industries’ tax liability
3. Ripple effect on marketing and business development related expenses such as gifts, conference expenses, incentives etc.
4. Consequences on claim of penalty, fine and compounding fee as business expenditure
5. Section 194R
6. Probable revisionary and reassessment proceedings pursuant to SC ruling
Taxsutra is considered the most credible source of tax news in the tax fraternity. What started as a fledgling start-up has now become a leading brand in the tax world not only in India, but across the globe. Taxsutra's diverse customer set includes Fortune 500 Companies, large Indian Business Groups, Global Conglomerates, Tax Judges, IRS Officers, CBDT, Tax Lawyers & thousands of tax practitioners.
Taxsutra suite of portals :
1. Real time tax news & analysis for Corporate Tax (www.taxsutra.com/dt)
2. Transfer Pricing Portal (www.taxsutra.com/tp)
3. GST and Central Indirect Taxes Portals (www.taxsutra.com/gst - www.idt.taxsutra.com)
4. "Taxsutra Database" - Powerful Online Direct Tax Reference and Search Tool (www.database.taxsutra.com)
5. LawStreetIndia (LSI) (www.lawstreetindia.com) contains sub-modules on Company law, Securities law (SEBI/SAT), FEMA, IP laws & Competition Law
6. Taxsutra Accounting Standards portal (Ind-AS) (www.greentick.taxsutra.com)
