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SC orders status quo on Rs.617 crore tax demand from Satyam
April, 07th 2011

The Supreme Court on Wednesday directed the Central Board of Direct Taxes (CBDT) to maintain status quo over its demand of Rs. 617 crore in income tax from the scam-hit Satyam Computers till Friday and asked it to work out the companys actual liability.

A three judges Bench headed by the Chief Justice S. H. Kapadia directed CBDT to work out the actual income tax liability of Satyam Computers, now Mahindra Satyam.

Status quo as of today is to be maintained till Friday, said the Bench and directed Additional Solicitor General Harin. P. Rawal, appearing for CBDT, to submit a chart showing what would be their liability.

The Bench also hinted that the IT firm would have to pay some parts of the actual demand: On Friday, they (Satyam) would have to pay some parts of it.

The apex courts direction came over a petition filed by the company, challenging the orders of the Andhra Pradesh High Court, which had directed the firm on March 30 to pay a bankers cheque of Rs. 350 crore and a bank guarantee for Rs. 267 crore within a week.

The High Court had also said that after receiving the money, the Additional Commissioner of Income Tax would withdraw the garnishee orders issued and defreeze its bank accounts.

During the proceedings, the Bench observed that the revival of the company (as Mahindra Satyam) was supported by the government and the department should consider their claim sympathetically.

You give us the revised figures, otherwise the company would sink... you just take out, the company for which is entitled for, the Bench said.

The Bench further said that if the government would go for rectification, then the case would go on for years.

We just wanted to know the actual amount they have to submit before us or at the High Court, the apex court said.

Senior advocate Harish Salve appearing for the Satyam Computers submitted before the Bench that the company was passing through tough times.

We have already paid $10 million to Securities and Exchange Commission (SEC) of USA for overstating the companys revenue, income and cash balances... What Mr. Anand Mahindra (whose company has bought over Satyam Computers) would do after all money gets attached for some reasons, said Mr. Salve, seeking stay on the income tax demand.

Earlier, the CBDT had turned down the companys requests not to impose the tax as the calculations were based on fictitious accounts of the previous management, led by disgraced founding chairman B. Ramalinga Raju.

The CBDT claim is based on Rs. 345 crore foreign tax credit availed of by the former management of the company, which the present leadership believes to be forged.

The Rs. 345 crore tax demand became Rs. 616,53,92,660 after the imposition of interest and penalties.

Satyam is contending that, in fact, the real amount was less and instead of a tax demand, CBDT should return Rs. 200 crore, as it has overpaid to the department.

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