The income tax department is investigating drugmaker Cipla over potential tax violations and tax avoidance, people with knowledge of the matter told CNBC-TV18. However, no tax demand has been raised so far, according to the source.
The department had carried out a survey action against the company on January 31.
Sources further said that the tax department is investigating whether Cipla made wrongful claims under Section 80-IA. Preliminary investigation has alleged wrong claims worth Rs 400 crore made under that section.
Section 80-IA of the IT Act provides for deduction of 100 percent of profit and gains derived from specific businesses for 10 consecutive assessment years in a block of 15 years, only up to a certain period.
Also Read | Contamination risk among 8 FDA observations on Cipla, stock takes a hit
The IT department has also alleged wrongful deductions worth Rs 1,300 crore claimed for Research and Development, according to the sources.
Section 35 of the IT Act provides for deduction on expenditure incurred for scientific Research & Development and ranges from 100-150 percent on a case specific basis.
The tax avoidance on funds was given as benefits to doctors and medical practitioners, the IT department has alleged, sources said.
In response to a CNBC-TV18 query, a Cipla spokesperson said, “There is no claim or demand made on us. Cipla in an exchange notification on February 6 had shared that the company has fully cooperated with the IT Department in providing details and documents requested. Cipla continues to do so, on all items indicated by the IT Dept.”
Shares of Cipla are trading 1.9 percent lower at Rs 858.15, a fresh 52-week low.
(With CNBC TV-18 inputs)
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
