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Fixed and expenses account entry as per ais

Question BankCategory: Income TaxFixed and expenses account entry as per ais
Kollipara sundaraiah asked 6 months ago

A doctor sec 44ab tax audit it returns filed every year.A doctor some expenses amount and fixed assets received from Pharma company show in as per ais and 26as f.y.22-23 it provision sec 194r in it act
Assessess fixed assets (car) and expenses (stationeary) account entry treatment in books and it returns.

3 Answers
Abhi answered 6 months ago

Please note that 
Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002, prohibits medical practitioners from accepting freebies,
As per above Regulations, receiving emoluments in the form of gifts, travel facilities, hospitality, cash, etc., can lead to suspension of a medical practitioner’s right to practice for up to one year
Hence The Central Board of Direct Taxes (CBDT) vide circular no. 5/2012, dated 01-08-20212, had clarified that expenses incurred by pharmaceutical and allied health sector industries for distribution of incentives (freebies) to medical practitioners are not eligible for deduction as per explanation 1 to section 37(1) of income tax act..
IN the plea filed by pharmaceutical companies , The Supreme Court held that ‘pharmaceutical companies’ gifting freebies to doctors is prohibited by law and they cannot claim it as a deduction under section 37(1) of income tax act.

Sunil answered 6 months ago

Apart from fact that gift received by doctor from pharma companies is not legal.
The same if received may be booked as other income in books of accounts and liable to pay tax on this income. And this is also subject to tds u/s 194R.

Abhi answered 6 months ago

Even if you pay tax on these gifts, still this is not legal.. And you have to be ready for penalty under medical regulations. or return all the gifts.

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