On March 5, 2013, the officials at the Health Ministry said that
they are planning to bring in a clear provision in the law to
promote generic drugs. The Health Ministry has invited comments
from stakeholders on amending rules pertaining to conditions for
grant of renewal of licences for manufacture of drugs to facilitate
approval of drug formulations by state licensing authorities in
their proper/generic name only. The Centre has also asked the
states and Union Territories to formulate time-bound action plan
for promotion of general drugs.
PSA view – It is too early to comment
as the proposal is still at a very nascent stage where the Health
Ministry is seeking the stakeholders's comments on the
Confederation of Indian Pharmaceutical Industries versus
The Indian Medical Council had imposed a prohibition on
"medical practitioners" taking any gift, travel facility,
hospitality, cash or monetary grant from pharmaceutical and allied
health sector industries. The CBDT issued a circular in January
2012 stating that the expenditure incurred by the assessee in
providing such freebies had to be regarded as incurred for a
purpose which is either an offence or prohibited by law and
disallowed under the explanation to s. 37(1) of the Income Tax Act
(any expense incurred by the assessee which is an offence under any
other law shall not be deemed to have been incurred). The
Confederation of Indian Pharmaceutical Industries challenged the
validity of this circular on the basis that it went beyond s. 37(1)
and was invalid. The Himachal Pradesh High Court held that
"The regulation of the Medical Council prohibiting medical
practitioners from availing of freebies is a very salutary
regulation which is in the interest of the patients and the public.
This Court is not oblivious to the increasing complaints that the
medical practitioners do not prescribe generic medicines and
prescribe branded medicines only in lieu of the gifts and other
freebies granted to them by some particular pharmaceutical
industries. Once this has been prohibited by the Medical Council
under the powers vested in it, s. 37(1) comes into play. The
Petitioner's contention that the circular goes beyond the
section is not acceptable. In case the assessing authorities do not
properly understand the circular then the remedy lies for each
individual assessee to file an appeal but the circular which is
totally in line with s. 37(1) cannot be said to be illegal. If the
assessee satisfies the assessing authority that the expenditure is
not in violation of the regulations framed by the medical council
then it may legitimately claim a deduction, but it is for the
assessee to satisfy the AO that the expense is not in violation of
the Medical Council Regulations."
PSA view – This decision has
reinforced the circular. Though in all likelihood, this decision
will be appealed, the issue seems to be much settled because unless
the circular itself is invalidated, which can only be done if the
Medical Council changes its regulation. Until then any expense
incurred by the assessee which is an offence under any other law
shall not be deemed to have been incurred and no benefits can be
availed by the assessee on such expenses.
Assistance for storage of food products
The MoFPI will provide financial assistance under the Scheme for
Cold Chain, Value Addition and Preservation Infrastructure. The
aforesaid scheme relating to different aspects of storage of food
products was consolidated in the 11th Five year plan. Under the
scheme the MoFPI will provide assistance of up to 50% and 75% of
the total cost of plant and machinery and technical civil works in
general areas and difficult areas respectively. The assistance is
subject to a maximum of Rs.10 crore. The initiative is aimed at
filling the gaps in the supply chain, strengthening of cold chain
infrastructure and establishing value addition with infrastructural
facilities like sorting, grading, packaging etc. Other agencies of
the Government like National Horticulture Board, Agricultural and
Processed Food Products Export Development Authority, National
Cooperative Development Corporation and State Government are
already providing assistance for cold storages under their
PSA view – Various surveys by
government and non-government agencies indicate that most of the
loss of food items occurs through lack of appropriate storage
facilities. The said scheme is not a new one, rather it's a
amalgamation of a new scheme. The impetus now lies on the
government to properly implement the provisions of the scheme which
benefits the food producers and manufacturers.
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