Mahindra Satyam moves Andhra high court against tax demand

Mahindra Satyam today moved the Andhra Pradesh high court in Hyderabad, challenging a claim by the Income-Tax department for recovery of Rs.616 crore relating to assessment years between 2003-04 and 2008-09.

The department had served a notice on Mahindra Satyam last year, demanding an audit of its accounts, as it had allegedly claimed tax credit on fictitious income between 2003-04 and 2008-09. The company was then known as Satyam Computers and was headed by then chairman Ramalinga Raju.

In January 2009, Raju admitted that the company's accounts had been falsified for several years involving over Rs.7,000 crore. He was later arrested and is now in jail. In April 2009, Tech Mahindra, part of Mahindra & Mahindra, acquired a controlling stake in Satyam and the company was renamed Mahindra Satyam.

The company also restated the financial results for six years, especially after investigating agencies concluded their probe. But the Central Board of Direct Taxes (CBDT) rejected the petitions filed by Mahindra Satyam seeking relief for re-opening past assessments for the years 2003-04 to 2008-09.

Strangely, the department also raised a demand for Rs.616 crore, insisting hat the fictitious income claimed by Raju was real. The department also froze the bank accounts of Mahindra Satyam as it failed to pay the demand.

The Andhra high court has posted the matter for hearing on Friday. In its plea, Mahindra Satyam claimed that since the tax demand was based on fictional income, it should not be made to pay the amount.