Income tax department attaches Mahindra Satyam assets
February, 04th 2012
The Central Board of Direct Taxes has attached the properties of beleaguered software outsourcer Satyam Computer Services, now rebranded Mahindra Satyam, to protect revenue that was due to it from the company.
The IT firm said it has received a provisional order from the taxman stating the attachment of properties was according to Section 281 B of the Income Tax Act. Section 281 B refers to recovery of tax and allows the tax department to issue provisional orders to the assessee to safeguard revenues accrued to it.
The provisional order is only an interim order and can be subject to further changes. A Mahindra Satyam spokesperson said the company would contest the order.
The company currently has seven campuses in Hyderabad. The income tax order comes just two days after Satyam announced its third quarter results reporting a fivefold yearon-year rise in net profit to Rs 308 crore. The firm also increased its tax provision in the quarter to Rs 500 crore from Rs 400 crore in last quarter.
Earlier this week, granting interim relief to Satyam, the Andhra Pradesh High Court stayed the Income Tax department's plea to encash a bank guarantee worth Rs 617 crore. The court also ordered a status quo on the assessment proceedings.
The Income Tax department had slapped notice on the company after disallowing exemptions claimed by the software firm. The company has received notices of demand for Rs 1,037 crore and Rs 1,075 crore for assessment years 2002-03 and 2007-08, respectively.
Ever since payment was demanded of Satyam, the firm has been constantly engaging with the tax department saying the computation of the tax dues were made based on the fictitious revenues recorded by the founder of Satyam B Ramalinga Raju.