IT department slaps Rs 616.53 cr fine to Mahindra Satyam

Hyderabad Mar 23: In a filing with the the Bombay Stock Exchange on Tuesday, Mahindra Satyam stated that the Central Board of Direct Taxes (CBDT) has dismissed the company's plea challenging a notice from the IT department. According to the notice Satyam had fraudulently claimed a foreign exchange tax credit benefit of Rs 345 crore, add to it the penalties, the CTBT has now directed the company to pay the amount of Rs 616.53 crore. The company has moved to Andhra Pradesh High Court to seek relief on the IT department's notice.

According to some media reports the IT department froze the bank accounts of Mahindra Satyam after the software firm failed to pay the stated amount of Rs 616.53 crore. Meanwhile Mahindra Satyam Chairman Vineet Nayyar told reporters, "We have moved the high court seeking an injunction order. The case is yet to come up for hearing."

The ministry of finance has also not responded to an application by the company to review the IT claim, Nayyar added.

The company officials were surprised that the though Central Bureau of Investigation (CBI) and other government agencies such as Serious Fraud Investigation Office (SFIO) were prosecuting former Satyam chief B Ramalinga Raju for showing fictitious income, but the CBDT made the same fictitious income a basis for demanding taxes.

Nayyar even argued that there cannot be any income tax on non-existing income. "Income tax will be paid only when there is income. In this case, it has been established that there was no income. Hence, there can't be any tax on that," he said.

Mahindra had bought over tainted Satyam in 2009 in an effort that was presided by the government of India. Nayyar claimed that the Indian government had given a sworn affidavit at the time to the company law board regarding the relaxation of all rules and laws, including IT laws, for Mahindra Satyam to be allowed to restate its accounts. "The issue is, is the affidavit binding on CBDT," Nayyar asked.

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