Cipla Faces Rs 773 Crore Income Tax Demand: Plans to Appeal

Cipla has received an income tax demand of Rs 773.44 crore from Mumbai tax authorities, covering assessment years 2015-16 to 2022-23. The demand, which Cipla plans to contest, includes interest and arises from disallowances under various sections of the Income-tax Act, 1961.

Cipla, a major player in the pharmaceutical industry, has been slapped with an income tax demand totaling Rs 773.44 crore by the Deputy Commissioner of Income Tax in Mumbai. According to an exchange filing, this demand spans assessment years from 2015-16 to 2022-23, following recent assessment and re-assessment orders issued on July 12.

The orders were officially received by Cipla on July 15 and 16. The substantial demand, inclusive of interest, stems from various disallowances made by the tax authorities. Key disallowances include short deductions under Section 80IE of the Income-tax Act, weighted deductions under Section 35(2AB), and disallowance of several expenditures under Section 37(1).

Section 80IE deductions relate to profits and gains from specific undertakings in designated states, while Section 35(2AB) pertains to expenditure on scientific research. Section 37(1) involves the disallowance of expenditures not deemed entirely for business purposes. Despite the hefty demand, Cipla contends that the orders lack legal standing. The company maintains that it has strong factual and legal grounds for contesting the demands and confirms its intent to appeal the orders under the relevant laws. The total amount of Rs 773.44 crore includes interest but does not consider potential refunds for the covered assessment years.