Cipla shares hit 52-week low on reports of I-T probe into tax violations

The share price of Cipla hit a fresh 52-week low at Rs 858.15 apiece, shedding around 2.5 percent, on Tuesday after the company reportedly came under the lens of the income-tax department over potential tax violation and tax avoidance, according to a CNBC-TV18 report.

The tax department is investigating alleged wrong claims made by the drug major worth Rs 400 crore under Section 80-IA as well as alleged wrongful deductions worth Rs 1,300 crore claimed for Research and Development, the report stated.

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Section 80-IA of the income tax Act allows for deduction of 100 percent of profit and gains derived from specific businesses for 10 consecutive assessment years in a block of 15 years, up to a certain period, while Section 35 of the I-T Act allows for deduction on expenditure incurred for scientific research and 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 income tax department has alleged, according to the sources.

However, the company had said that there is no claim or demand made on them.

“Cipla in an exchange notification on February 6 had shared that the company has fully cooperated with the I-T department in providing details and documents requested. Cipla continues to do so, on all items indicated by the I-T department,” Cipla spokesperson said in response to a CNBC-TV18 query.

On January 31, the income Tax department had carried out a survey action against Cipla and conducted surprise action to check the balance sheets and other documents as part of the alleged tax evasion investigation.

At 12.53pm, the shares of the company were trading 0.18 percent down at Rs 873.55 apiece on the BSE, while the BSE Healthcare Index was down 0.022 percent at 21,479.99 points.