I-T slaps tax demand of Rs 2,114 cr on Mahindra Satyam

The Income Tax (I-T) department has slapped a tax demand of Rs 2,114 crore on IT firm Mahindra Satyam (erstwhile Satyam Computer Services), after disallowing exemptions claimed by the company.

"The company has received draft notices of demand for Rs 1,037.69 crore and Rs 1,075.73 crore for assessment years 2002-03 and 2007-08, respectively," Mahindra Satyam said in a filing to the Bombay Stock Exchange.

A senior official of the company said that they are yet to receive the notice and may approach the I-T tribunal for justice.

"This is only a draft assessment order. We will respond once we receive the tax notice. We may approach the Tribunal. The tax was levied on fictitious income. It is not justified. Even the government is aware that the income was fictitious during that period," the official said.

Tech Mahindra had acquired Satyam Computer after a multi-crore accounting fraud in the company came to light in January 2009. After acquisition, the company was re-branded as Mahindra Satyam.

Mahindra Satyam has been seeking return or adjustment of taxes paid on inflated income when disgraced founder Ramalinga Raju was the chairman of the IT company.

The company has argued that the tax payments were made on account of alleged fudged records shown by the company.

"The draft of the proposed assessment orders proposes disallowance of tax exemptions/deductions claimed by the company. However, it does not exclude fictitious income wrongly offered to tax by the earlier management," the filing said.

The existence of fictitious sales and fictitious interest has even been confirmed by other government agencies during the investigation, it added.

The company has in several writ petitions filed before the Andhra Pradesh High Court, challenging the re-opening of the assessment of AY 2002-03 and sought directions that fresh assessments should be carried out after removing the fictitious sales and fictitious interest.

These petitions are pending before the High Court.