Satyam's tax appeal

Disposing the appeal filed by Mahindra Satyam against a Rs 617-crore income tax demand made on it, the Supreme Court today directed the company to furnish a bank guarantee for the entire amount by April 25 before the court registrar.

Once this is done, said the bench headed by Chief Justice S H Kapadia, the company is to file a “comprehensive” petition before the Central Board of Direct Taxes (CBDT) within two weeks, giving all particulars to enable a fresh assessment of the tax liabilities related to the years 2003-2004 to 2008-09. CBDT has been directed to hear and decide the dispute within another two weeks and give its reasoning in support of the order. This was not done last time.

As for Satyam, it told the court it would withdraw the petition it had filed against the tax demand at the Andhra Pradesh high court.

The SC made it clear that its order was not on the merits of the case. If the company was not satisfied with the new CBDT order, it could take recourse to the law.

Last year, the income tax department had served a showcause notice on Mahindra Satyam, demanding an audit of its accounts for the assessment years 2003-04 to 2008-09.

The company, which was then Satyam Computers under the ownership of Ramalinga Raju, now in jail, was accused of illegally claiming tax credit on fictitious income during the period. When the issue was taken up by the company before CBDT, it was not given a hearing before passing the adverse order against the company, which had become Mahindra Satyam under a new management.

The SC had accepted an offer made last week by the Attorney General that the CBDT was willing to give the company a fresh hearing and the earlier order would be withdrawn.

The shares of Satyam closed at Rs 77.30, up 1.4 per cent, at the Bombay Stock Exchange today.