Cognizant accused of failing to pay ₹2,500 cr. tax

The Income Tax department has accused software major Cognizant Technology Solutions of having failed to pay Dividend Distribution Tax (DDT) of around ₹ 2,500 crore while remitting ₹19,415 crore to its non-resident shareholders in the United States and Mauritius towards buyback of 94,00,543 of its equity shares in May 2016.

In a counter-affidavit filed before the Madras High Court, the IT department conceded that the company had provided employment to many. However, in return it was provided with incentives by way of 100% tax holiday. Post-tax holiday, it was availing Minimum Alternate Tax (MAT) credit. “The petitioner was pampered by the nation so as to enable it to remain competitive and resilient to market vagaries by the support given by the tax laws. The minimum responsibility that can be expected from the petitioner is to pay the tax due to the country while taking away/repatriating huge accumulated profits of ₹19,415 crore,” the department stated.

R. Muthukumar, Deputy Commissioner of Income Tax, Large Taxpayers Unit-I, Chennai filed the counter-affidavit in response to a writ petition preferred by CTS challenging a recovery order passed on March 22. The order was passed after giving about four months to the company to settle the dues.

Since Justice T.S. Sivagnanam, the portfolio judge, was on leave on Monday, the case was listed before Justice Abdul Quddhose. He chose to adjourn it to Tuesday as a standing counsel for the I-T department sought time for the appearance of Additional Solicitor General G. Rajagopalan.