LI Network
Published on: January 1, 2024 at 11:00 IST
The Madras High Court has granted relief to Cognizant Technologies by staying the Income Tax Department’s demand of ₹9,403.09 crore related to the IT firm’s share buyback exceeding ₹19,000 crore in 2017-18.
The Court, however, directed Cognizant to make a security payment of ₹1,500 crore to the department within four weeks, pending a decision on whether the company is liable for dividend distribution tax on the buyback expenses.
In its order last week, a bench comprising Justice Mohammed Shaffiq and Justice R Mahadevan stated that failure to comply with the payment condition would automatically vacate the stay order, allowing the tax department to recover the tax liability through legal means.
Regarding the tax lien against the demand, the bench instructed the tax department to release title deeds for the property and remaining fixed deposits held in banks once Cognizant made the deposit.
The tax authority argued that securing the outstanding demand was essential to protect the revenue department’s interests and dismissed the company’s financial difficulty claims, noting its assets of around ₹21,644 crore as of March 31, 2022.