Cognizant to pay 15 per cent of evaded tax of Rs 2,800 cr

Chennai: Madras high court has directed IT major Cognizant Technologies to pay 15 per cent of alleged evasion of dividend distribution tax of Rs 2,800 crore.
Justice T.S. Sivagnanam gave the directive while passing interim orders on a petition filed by Cognizant, challenging the tax demand made by the income tax department and coercive action taken by the department by freezing its 68 bank accounts.

“There shall be an order of interim stay of impugned proceeding subject to the condition that the petitioner pays 15 per cent of the tax demanded and furnishes a bank guarantee or security by way of fixed deposit for the remaining taxes demanded. For the proper compliance to the above condition the attachment of bank account J.P Morgan Chase Bank, Mumbai shall stand lifted forthwith,” the judge added.

The judge said, however, the attachment in respect of other banks SBI, Deutsche Bank and Corporation bank and HDFC bank shall continue till the compliance of the direction. Similarly the attachment of nine bank deposits to the tune of Rs 2,265 crore will also continue subject to the lien being created for remaining amount of taxes. 

The remittance of 15 per cent of the tax demanded shall be retained in a separate account and shall abide by the order to be passed in writ petition, the judge added and posted to April 18, further hearing of the case.

The issue pertains to Rs 2,800 crore tax demand made towards dividend distribution tax for remitting Rs 19,415 crore to its non-resident shareholders in the United States and Mauritius towards buyback of 94,00,543 of its equity shares in May 2016.