The Income Tax Department has raised a demand of about Rs 570 crore on Mahindra Satyam (earlier Satyam Computer Services) for illegally claiming tax credit on fictitious income during the 2003-04 to 2008-09 period.

"We have asked the company to pay about Rs 570 crore as tax, as the company claimed the credit on tax which it did not pay overseas," official sources said.

Satyam Computer Services, which was acquired by Tech Mahindra in April last year after the software firm got embroiled in a nearly Rs 10,000 crore scam, had claimed credit on tax paid overseas on interest income.

However, the so-called income was found to be fictitious, and so was the tax payment claim, the sources said.

As such, no tax credit was due to the company and the department has raised a demand, which includes interest on the delayed payment as well, they said.

Although the company has asked the department to overlook the income, as it was fictitious, sources said, "This is not possible, as there is no provision in the law to write off the income."

The Rs 570 crore tax demand will have implications for Mahindra Satyam, which is struggling to get back on the right track.

The software company is also trying to overcome the damage to its image caused by the multi-crore fraud perpetrated by founder chairman B Ramalinga Raju.

Last week, Mahindra Satyam had come out with financial results for 2008-09 and 2009-10, reporting a net loss of Rs 8,176.8 crore and Rs 124.60 crore, respectively.