Cognizant Technology appeals to larger bench of Madras HC on tax order

Cognizant Technology Solutions has appealed to a larger bench of the Madras High Court against the order of a single-judge bench against the company on the income tax department’s claim on non-payment of Dividend Distribution Tax (DDT).

The department had issued an order in late March that the dues in question, including interest and others, were around Rs 4,500 crore. In an order issued in the last week of June, judge K Kalyanasundaram dismissed a petition from Cognizant against the order — the latter has told the company to remit tax at 15 per cent of the total payment of Rs 19,415.6 crore, with interest. The judge directed the company, if it wished, to approached the appellate authority against the department's assessment.   

When the matter came up hearing on Thursday, senior counsel Gopal Subramanium argued for Cognizant that as capital gains of Rs 898 crore had been withheld for the said transaction, it cannot be simultaneously considered under another section of DDT, among other aspects. The company had also paid Rs 495 crore when the matter was pending before the court, in line with an interim order.

Karthik Ranganathan, senior counsel for the I-T department, argued the amount due, including surcharge, cess and others in May 2016 was around Rs 3,300 crore; the accumulated interest was Rs 1,200 crore. Making a total of Rs 4,500 crore, of which only Rs 495 crore had been deposited till date by the company.

The court adjourned the matter for hearing on a later date, directing status quo till then.