Supreme court gives relief to Mahindra Satyam in tax demand case
09 April 2011The Central Board of Direct Taxes (CBDT) will recall its March 10 order, demanding Rs.617 crore from Mahindra Satyam, and hear the company's plea before giving ''a well-reasoned order,'' attorney general G E Vahanvati assured the Supreme Court.
Vahanvati, however, opposed the company's plea to de-freeze its bank account with a balance of Rs1,300 crore. ''Let the money remain with us,'' said the attorney general. ''If after that revised process, if they are entitled, we will refund them.''
The company had cash reserves of Rs1,800 crore, which could help it meet its liabilities including the payment of salaries to its employees and to pay $10 million the US Securities and Exchange Commission.
The apex court agreed with the attorney general and posted the matter for hearing on Monday. ''You would be protected,'' the court told the Mahindra Satyam counsel. ''Right now your main grievance is that you were not heard by the CBDT.''
The Supreme Court had earlier directed the CBDT to calculate the actual income-tax liability of Satyam Computers (which was renamed Mahindra Satyam after Tech Mahindra acquired it) to compute its tax liability after expunging the 'fictitious sales income' (See: Apex court orders 'status quo' on Rs617 crore tax demand on Satyam till tomorrow)
The CBDT had last month sent a tax claim based on Rs345 crore foreign tax credit availed of by the former management of the scam-hit company. The claims shot up to Rs617 crore after including interest and penalties.
The present management argued that the claims were forged and that even the investigating agencies had confirmed the same while probing the role of former chairman B Ramalinga Raju.
The company had approached the Andhra Pradesh high court, which had however, rejected its plea and had directed it to pay Rs617 crore to the CBDT. (See: HC orders Satyam to pay CBDT Rs350 crore news)
Earlier this week, the company reached an out-of-court settlement with the US Securities and Exchange Commission (SEC), agreeing to pay a civil penalty of $10 million for the financial fraud of 2009 (See: Fraud fallout: Satyam, PwC to pay US authorities $17.5 mn news) PricewaterhouseCoopers, India, its auditors, also agreed to pay $7.5 million in fines to the SEC. This was the second time that Mahindra Satyam agreed to settle disputes in the US; in February it agreed to pay $125 million to plaintiffs in a private class action suit.