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CHENNAI: In a reprieve to Cognizant Technology Solutions India, the Madras high court has granted an interim stay against the income tax department liquidating Rs 2,956-crore bank deposits of the company in lieu of Rs 4,300-crore tax arrears.
A division bench of Justice R Mahadevan and Justice Mohammed Shaffiq has, however, directed Cognizant to make payment of Rs 1,500 crore and furnish property security for the tax liability within four weeks.The court made it clear that the interim protection granted to the company will automatically stand vacated if it fails to comply with the condition.
This apart, the court has directed the I-T department to release the lien created on the bank deposits on payment of Rs 1,500 crore and furnishing of property security.
The issue pertains to Rs 19,000 crore share buyback undertaken by Cognizant in 2017-18. While the company contended that the transaction would only attract capital gains tax for shareholders, the I-T department treated it as distribution of accumulated profit and taxed it as dividend.
A division bench of Justice R Mahadevan and Justice Mohammed Shaffiq has, however, directed Cognizant to make payment of Rs 1,500 crore and furnish property security for the tax liability within four weeks.The court made it clear that the interim protection granted to the company will automatically stand vacated if it fails to comply with the condition.
This apart, the court has directed the I-T department to release the lien created on the bank deposits on payment of Rs 1,500 crore and furnishing of property security.
The issue pertains to Rs 19,000 crore share buyback undertaken by Cognizant in 2017-18. While the company contended that the transaction would only attract capital gains tax for shareholders, the I-T department treated it as distribution of accumulated profit and taxed it as dividend.
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