- The Income Tax Department appealed relief on ₹32,66,18,927 in Employee Stock Option Plan expenses for Assessment Year 2022–23.
- The Income Tax Appellate Tribunal in New Delhi will decide the tax dispute; the appeal is not a final ruling.
- Dr Lal PathLabs shares fell 2.38 percent to ₹1,898.90 on October 8, while the broader market also weakened.
The Income Tax Department has appealed a ruling that granted Dr Lal PathLabs relief on ₹32,66,18,927 in Employee Stock Option Plan expenses for Assessment Year 2022–23. The dispute is now before the Income Tax Appellate Tribunal in New Delhi.
The company received notice of the appeal on October 7, 2026, at 3:31 p.m., according to its disclosure. The filing challenges an appellate order allowing relief against the expense disallowance.
Free toolSubstantial Presence Test Calculator
Dr Lal PathLabs shares closed at ₹1,898.90 on the NSE on October 8. They fell ₹46.20, or 2.38%, from the previous close of ₹1,945.10.
The appeal returns the tax treatment of the expenses to dispute. It does not itself decide whether the company can claim the amount.
The case has moved from assessment to a further appeal
The dispute began with an assessment order the company received on April 1, 2024, concerning the ESOP-expense disallowance. The amount at issue is the expense claimed, not a stated tax bill in the company’s disclosure.
On July 17, 2026, the Commissioner of Income Tax (Appeals) issued an order under Section 250 of the Income Tax Act, 1961, granting relief. The department has now challenged that order before the tribunal.
That sequence puts the matter at a further appellate stage. The underlying question remains whether the ESOP-related expenditure should be allowed for tax purposes in Assessment Year 2022–23.
The company's position is that the appeal will not materially affect it
Dr Lal PathLabs said it “does not reasonably expect the outcome of the appeal to have any material impact” on the company.
“does not reasonably expect the outcome of the appeal to have any material impact”
The company’s regulatory disclosure also said it did not expect the proceedings to materially affect its operations or finances. That is management’s current assessment, rather than a determination of the eventual tax consequences.
Shares fell as the broader market also weakened
The share-price decline came on a day when the broader market also weakened. The broader-market decline means the appeal cannot be treated as the sole explanation for the move.
| Market measure | Reported figure |
|---|---|
| NSE close on October 8, 2026 | ₹1,898.90 |
| Previous close | ₹1,945.10 |
| Daily change | Down ₹46.20, or 2.38% |
| Trailing price-to-earnings ratio | 59.76 |
| Market capitalization | Approximately ₹31,873 crore |
| Year-to-date return | 25.70% |
The market figures provide context, not proof of what drove the day’s trading. The appeal coincided with the share decline, while the broader market also weakened.
The tribunal will decide the expense dispute
The pending appeal is not a final ruling that the expense is either deductible or disallowed. The tribunal may uphold, modify or overturn the earlier appellate order, with any further appellate review coming afterward.
The department’s challenge concerns the tax treatment of the expenses for Assessment Year 2022–23. The next substantive determination rests with the tribunal.
This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.
