M/S APEX LABORATORIES P. LTD. vs THE DEPUTY COMMISSIONER OF INCOME TAX LARGE TAX PAYER UNIT II

The Supreme Court upheld the decision of the High Court which affirmed the ITAT's ruling that expenses incurred by Apex Laboratories for distributing incentives to medical practitioners were not eligible as business expenditure under Section 37(1) of the Income Tax Act, 1961. The court referenced a CBDT circular that explicitly stated such expenses are prohibited and thus not deductible. The ruling reinforces the interpretation of business expenditure in light of legal prohibitions.