The Andhra Pradesh High Court granted a breather to IT outsourcing firm Satyam Computer Services, now rebranded as Mahindra Satyam, on Wednesday by staying the Income Tax Department's provisional order to attach properties of the IT firm. The court said the Central Board of Direct Taxes (CBDT) had violated the Court's order by issuing an interim order to the firm on February 4.

The CBDT's counsel said the department had issued the order anticipating tax accrued to the department amounting to 4,000 crore. However, the court said the CBDT had not produced sufficient documentary evidence to support this tax claim. The IT firm had challenged the notices of tax authorities by filing a writ petition in the court.

CBDT had passed a pre-dated provisional order on January 30 to attach properties of SCS to protect revenue that was due to it from the software outsourcer. The provisional order was issued under Section 281 B of the Income Tax Act that 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.

In the first week of February, Satyam announced its third quarter results reporting a five-fold year-on-year rise in net profit to 308 crore.

It has also increased its tax provision in the quarter to 500 crore from 400 crore in the previous quarter. In its last order, the AP High Court stayed the Income Tax Department's plea to encash a bank guarantee worth 617 crore.