Tax department slaps Rs 18 cr notice on Polaris

Polaris Software Lab has informed Bombay Stock Exchange that it has been served with a notice by the Income Tax authorities for payment of Rs 18.03 crore as additional taxes under the Income Tax Act, 1961 for the financial years 2000-2001 and 2001-2002.

This is primarily on account of denial of certain deductions under Section 10A for the software profits the company earns out of its Software Technology Parks of India-registered units in Chennai.

The company maintains that the demands are not sustainable and has decided to file an appeal before the commissioner (Appeals), the first appellate authority.

"We will file a legal appeal in the next one month as to why this claim is untenable. The reasons for the claim is centered around a technical fact that a certain component of offshore revenues is not allowable under the IT Act," said Prabal Basu Roy, group chief financial officer, Polaris.

He mentioned that the company may approach the National Association of Software & Services Companies to protest the notice from the income tax authorities.