The Madras High Court has orally instructed the Income Tax Department not to "precipitate" the issue with regard to a notice issued by it to US-based IT firm Cognizant alleging tax evasion of Rs 2,500 crore.
The company has filed a plea in the court seeking a stay on recovery proceedings as the I-T department has frozen some of its bank accounts.
When the matter came up before Justice M Duraiswamy yesterday, senior counsel P S Raman, appearing for Cognizant, sought a stay on recovery proceedings initiated by the I-T Department.
Justice Duraiswamy, who posted the matter for further hearing to Monday, orally directed the Additional Solicitor General, G Rajagopalan, not to precipitate the matter till that date and also directed them to file a counter.
The Additional Solicitor General, who appeared on behalf of the I-T Department, acceded to the direction and made a submission to that effect.
The US-based IT firm has said it paid all applicable taxes related to its buyback transaction in 2016 and the Income Tax Department's position is "contrary to law and without merit".
The tech giant's comments follow the department freezing its certain bank accounts in the country over a dispute on payment of dividend distribution tax (DDT) running into hundreds of crores of rupees.
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