Karnataka HC asks IBM to deposit half of I-T claim amount

Modified order stipulates IBM to deposit 50% amount on or before Mar 31

The Karnataka High Court (HC) has modified its earlier interim order on a tax case against IBM India tax case, and has allowed the Income Tax Department to collect only 50% of Rs 1,090 crore tax demand as claimed by the department from the company for the assessment year 2008-09.

In its interim order issued on 29 January, the HC had stayed the interim order of the I-T Appellate Tribunal which had asked the company to deposit Rs 50 crore. The I-T department however had challenged this in the High Court saying that tribunal's order for depositing Rs 50 crore comes as against a total demand of Rs 1,090 crore on the basis on the submission made by the assessee (IBM India), "has caused financial hardship and irreparable injury to the exchequer".

According to the modified order of the HC, IBM will have to deposit 50% of the claim amount on or before March 31. The court also asked the Income Tax Appellate Tribunal to expedite the hearing of the appeal. When contacted by Business Standard the company spokesperson in an email statement said, IBM will not comment on current proceedings.”

According to reports, IBM India had earlier claimed deductions for income earned by exporting software and services from STPI units under Section 10A of the Income Tax Act. However, the Department reportedly found that while IBM has units both in STPI zone and outside the STPI, the company had not maintained separate books of account and thus rejected its claim for deduction.

The Tax authorities have in recent times been aggressively pursuing tax cases.