Cognizant Technology Solutions said its operations would not be affected by the ongoing income tax dispute with Indian authorities, a day after the Madras High Court's decision to lift a freeze on its bank accounts.
Cognizant Technology Solutions said its operations would not be affected by the ongoing income tax dispute with Indian authorities, a day after the Madras High Court's decision to lift a freeze on its bank accounts.
On Tuesday, the High Court asked the Income-Tax Department to release bank deposits of the Teaneck, New Jersey-based technology services firm.
The accounts had been frozen a couple of weeks ago as the I-T Department alleged that the US-based tech giant had evaded dividend distribution tax (DDT) to the tune of Rs 2,500 crore.
On Tuesday, the Court granted Cognizant’s application for a stay of the actions of the I-T Department and a lifting of the department’s attachment of Cognizant’s bank accounts.
"As part of the stay order, Cognizant will deposit USD 75 million (Rs 4.9 billion), representing 15 percent of the disputed tax, to be kept in a suspense account by the ITD, with the remainder marked under lien. The Court further granted the request of Cognizant to address the ITD’s collection actions and scheduled a hearing later in April 2018," the company said in a statement late Tuesday night.
“Our operations remain unaffected,” said Karen McLoughlin, Chief Financial Officer, Cognizant. “This dispute is with respect to a lawful, fully reviewed and disclosed the transaction, and we are pleased with today’s decision that restores appropriate due process. Cognizant is committed to complying with the law in all jurisdictions in which we operate, and we will continue our defence against the assertions of the Indian Income Tax Department in this and other tax disputes,” she added.
Cognizant further said that in the said transaction, undertaken pursuant to a plan approved by the Madras High Court, it paid approximately USD 135 million (Rs 9 billion) in Indian income taxes, "which it believes are all applicable taxes owed according to Indian law."