Tax evasion allegations against Cipla: The income tax department has started an investigation against Cipla over the allegations of tax violations and tax avoidance by the Mumbai-based multinational pharmaceutical company. However, the department has not raised any tax demand so far, people with knowledge of the matter said as reported by CNBC-TV18
Earlier on January 31 this year, the Income Tax Department had carried out a survey action against the drug major Cipla. The department conducted surprise action to check the balance sheets and other business documents of the company as part of the alleged tax evasion investigation.
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The Income Tax Department, as per sources, is probing whether the drug manufacturer company made wrongful claims under Section 80-IA. As per preliminary investigation, the company has made wrong claims worth Rs 400 crore under that section, reported CNBC-TV18.
Section 80IA allows a deduction of 100 percent of profits obtained from the businesses for a time period of 10 consecutive years out of 15 years from the date of its commencement.
As per the allegations levelled by the Income Tax department, the company has made wrongful deductions worth Rs 1,300 crore claimed for Research and Development, according to the sources.
Provisions of section 35 of the Income Tax Act, 1961 covers deduction allowable towards expenditure on scientific Research & Development and ranges from 100-150 percent on a case specific basis, reported CNBC-TV18.
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The department further claimed that the tax avoidance on funds was given as benefits to doctors and medical practitioners, sources added.
“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,” a Cipla spokesperson said as quoted by CNBC-TV18.
Cipla Ltd Share Price Today
Following the reports of IT department investigation for the alleged tax avoidance by the company, the shares of Cipla are trading 1.30 percent lower at Rs 873.85. Apiece stock of Cipla ended at Rs 875.15 in the previous day trading session.
