The income tax department has attached theatre chain Pyramid Saimira's bank accounts of more than Rs240 crore, for alleged non-payment of tax.
The I-T department in Chennai attached the bank accounts of Pyramid Saimira for what it said failure to provide complete self-assessment tax. The company, however, denied any tax liability and said it would challenge the department's decision.
Pyramid Saimira sources said the company would file a case against the income tax department in the Chennai high court.
''As far as PSTL is concerned, as of now we have no tax dues. We have filed a revised return wherein we have claimed a refund. There is no tax demand on us based on completed assessment," a report quoted P S Saminathan, chairman and managing director of the company, as saying.
''We feel this continued attachment by the I-T department is not in accordance with law and further their purported demand was for Rs26 crore and for that they have attached Rs165 crore of investment/Rs50 crore of normal trade receivables and Rs30 crore of theatre receivables totalling Rs245 crore," he added.
The attachment has completely crippled the operations of Pyramid Saimirs, which was already going through some tough times. With no funds in hand, employees have not been paid for the last three months and operations have come to a standstill.
The I-T attachment has affected disbursement as all the collection money from everywhere goes into that account, said N Narayan, director of the company.
The company needs around Rs60 crore to meet general business expenses and another Rs1.5 crore to pay salaries to its 300-odd employees.
Company official's say they have filed revised IT returns, and are, in fact, expecting a refund of close to Rs2 crore.
Faced with losses in its theatre and movie distribution businesses, Pyramid Saimira was planning to partially or fully sell some of its subsidiaries to help the company bridge its working capital gap of Rs60 crore. PSTL also planned to reduce the number of movie screens it runs in the country.
In a filing with the Bombay Stock Exchange last week, PSTL said it has the board's in-principle approval to reorganise its production and distribution divisions by the end of this fiscal year. The board has also authorised any strategic sale that may be required to effectively reorganise and revitalise the subsidiaries.
The board had also approved a writedown of Rs76.94 crore in the books of the company so that the current books reflect the realisable value of investment.