I-T dept sends Rs 616 cr tax demand to Mahindra Satyam -Governance Now

I-T dept sends Rs 616 cr tax demand to Mahindra Satyam

Company challenges the tax demand in AP high court

PTI | March 23, 2011

The Income Tax Department has slapped a Rs 616 crore demand on Mahindra Satyam, a big set-back for the new brand identity of Satyam Computers which was hit by the country's biggest accounting fraud and was eventually bought over by Mahindras.

The company has moved the Andhra Pradesh High Court, challenging the tax demand.

"How they worked it out, as I say, is 'Mysterious ways of God'. What they say is, Rs 345 crore is the foreign tax credit which Satyam (before being taken over) had claimed," Mahindra Satyam Chairman Vineet Nayyar said in a media conference call.

These certificates were forged and the company has already made a representation to the Finance Ministry and also moved the AP High Court, he added.

After the confession of a multi-crore accounting fraud by its founder B Ramalinga Raju in 2009, Satyam Computers plunged into a financial crisis. The matter is now being prosecuted by Indian investigative agencies.

Nayyar said the Central Board of Direct Taxes (CBDT) turned down the company?s requests not to impose the tax as the calculations are based on the accounts of the previous management and have proved to be fictitious.

The Rs 345 crore became Rs 616,53,92,660 after the imposition of interest and penalties.

"Using foreign tax credits arises only when there is income and Satyam never had that income. Therefore, what we have been telling (them) is the income tax has to be paid or levelled on the income which was true on the reassessed income not on the fabricated and forged accounts for which Raju is criminally prosecuted," Nayyar said.

In fact, he said that instead of a tax demand, the CBDT should return Rs 200 crore, which the company overpaid to the department.

"We have a peculiar situation wherein two agencies of the Government say Satyam overpaid taxes and which logically should be refunded to us. The IT Department says that they would charge tax on what is now proved beyond doubt are forged accounts. Since it is large number, it came bit of surprise to the share-holders and the public," Nayyar said.

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