Chennai: Giving relief to Cognizant Technology Solutions India Madras High Court has imposed an interim stay on liquidation of bank deposits of Rs 2,956 crore of the company by the Income Tax Department in lieu of tax dues of Rs 4,300 crore.
bench of justice R Mahadevan and justice Mohammad Shafiq However, Cognizant has been directed to pay Rs 1,500 crore and deposit asset security for tax liability within four weeks. The court made it clear that if the company fails to comply with the conditions then the interim protection granted to the company will automatically lapse. ,
Further, the court has directed the IT department to release the lien created on bank deposits upon payment of Rs 1,500 crore and deposit of property security.
The case pertains to share buyback worth Rs 19,000 crore undertaken by Cognizant in 2017-18. While the company argued that the transaction would attract capital gains tax only for shareholders, the IT department considered it a distribution of accumulated profits and taxed it as dividend.
bench of justice R Mahadevan and justice Mohammad Shafiq However, Cognizant has been directed to pay Rs 1,500 crore and deposit asset security for tax liability within four weeks. The court made it clear that if the company fails to comply with the conditions then the interim protection granted to the company will automatically lapse. ,
Further, the court has directed the IT department to release the lien created on bank deposits upon payment of Rs 1,500 crore and deposit of property security.
The case pertains to share buyback worth Rs 19,000 crore undertaken by Cognizant in 2017-18. While the company argued that the transaction would attract capital gains tax only for shareholders, the IT department considered it a distribution of accumulated profits and taxed it as dividend.
