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News Topical, Digital Desk : Dr Reddy's Laboratories Limited on Tuesday said it has received an interim stay order from the Telangana High Court in an income tax re-assessment case. The case pertains to the financial year 2020-21 (April-March) and stays the re-assessment of transactions related to the merger of the company with its promoter holding entity, Dr Reddys Holding Limited.
The Assistant Income Tax Commissioner of Hyderabad had issued a notice on April 4 and passed an order on May 30, claiming that the merger with Dr Reddys Holding was not shown in the tax filing, which was considered tax evasion. In response, Dr Reddys Labs filed a writ petition in the Telangana High Court seeking quashing of the tax re-assessment order, stating that there was no tax evasion.
Merger approval
The National Company Law Tribunal (NCLT), Hyderabad, approved the merger scheme on April 5, 2022, with an appointed date of April 1, 2019. Under this, Dr Reddy's Holding merged with Dr. Reddy's Laboratories. However, the Income Tax Department has demanded Rs 2,395 crore alleging tax evasion from the merger.
What is the company's claim? Dr Reddy's Labs said that the merger was completely legal and in accordance with tax rules. The company expects that it will not have any major financial impact. The merger agreement also has an indemnity clause, under which the promoters will be responsible for any liability arising out of the merger.
Dr Reddy's Labs: Share Performance Shares of Dr. Reddy's Lab closed down 1.78% at Rs 1,261.10 on the National Stock Exchange on Tuesday. This stock, with a market capitalization of about Rs 1.05 lakh crore, has a 52-week high of Rs 1,414.99 and a low of Rs 1,020. The stock has shown a gain of 12% in the last 6 months. It has slipped by about 10% in the last one year.
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