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Alkem Laboratories Discloses IT Assessment Orders for AY 2018-19 and 2019-20 – Key Details
Team Finance Saathi
28/Dec/2024
What's covered under the Article:
- Alkem Laboratories receives tax assessment orders for AY 2018-19 and 2019-20.
- The company disputes Rs. 74.29 Crores worth of deductions claimed under section 80IE.
- Alkem Laboratories assures no material financial impact due to utilization of MAT credit.
On December 28, 2024, Alkem Laboratories Limited (Scrip Code: 539523) informed both BSE Limited and the National Stock Exchange of India about the receipt of re-assessment orders under the Income Tax Act, 1961 for the Assessment Years 2018-19 and 2019-20. The company disclosed this information pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR Regulations), which mandates that companies report any significant financial developments.
The tax authorities have disallowed part of the deduction claimed under Section 80IE of the Income Tax Act for the aforementioned years. Specifically, the authorities have disputed an amount of Rs. 74.29 Crores (Seventy-Four Crores and Twenty-Nine Lakhs) in relation to these deductions. However, the company has clarified that no amount is payable by Alkem Laboratories, thanks to the utilization of available MAT (Minimum Alternate Tax) credit.
This tax dispute is an addition to the previously disclosed amount of Rs. 375.14 Crores related to Assessment Years 2020-21 and 2022-23, which was shared in an earlier communication dated December 25, 2024.
Details of the Tax Orders:
The orders for the Assessment Year 2018-19 were received on December 27, 2024, while the orders for 2019-20 came in on December 28, 2024. According to these orders, the Income Tax Authority claims that the company has claimed excess deductions under Section 80IE of the Income Tax Act. These deductions are typically claimed for specific industries and geographical areas to promote investment and economic growth.
Despite the dispute, Alkem Laboratories has emphasized that there is no material financial impact on the company, as the tax dispute does not involve any expected cash outflow. The company believes that the dispute is untenable and is confident in its ability to provide legal and factual grounds to challenge the order under the relevant laws. The company intends to appeal the decision in the appropriate forums.
Impact on Business and Operations:
Alkem Laboratories assures stakeholders that the dispute will not affect its financial operations or business activities. The dispute relates solely to tax deductions, and since the company has already utilized MAT credits, it does not face any immediate financial liability from the dispute. The legal process will continue as the company works towards defending its position.
The matter has not caused any significant disruption in the company's operations, and it is expected that the company’s financial performance will remain unaffected. Alkem remains confident that it will be able to resolve the dispute favorably through legal recourse.
For further information, stakeholders can visit Alkem Laboratories’ official website at www.alkemlabs.com.
In summary, Alkem Laboratories has received assessment orders for the years 2018-19 and 2019-20, which challenge the claimed deductions, but the company has no expected cash outflow as a result of the dispute, thanks to MAT credit. The company intends to pursue an appeal against the orders, backed by its strong legal grounds.