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HomeNewsIndustryMadras High Court lifts attachment of Cognizant accounts after surety of $75 million

Madras High Court lifts attachment of Cognizant accounts after surety of $75 million

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As part of the stay order, Cognizant will deposit $75 million (Rs 4.9 billion), representing 15% of the disputed tax, to be kept in a suspense account by the ITD, with the remainder marked under lien.

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In a temporary relief to technology firm , has granted its application for a stay of the actions of the Income Tax Department (ITD) and a lifting of the department's attachment of Cognizant's bank accounts.

As part of the stay order, Cognizant will deposit $75 million (Rs 4.9 billion), representing 15% 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.

“Our operations remain unaffected,” said Karen McLoughlin, Chief Financial Officer, Cognizant. “This dispute is with respect to a lawful, fully reviewed and disclosed 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 defense against the assertions of the Indian Income Tax Department in this and other tax disputes.”

The underlying dispute involves the Income Tax Department's recent assertion that it is owed additional taxes in connection with a 2016 $2.8 billion share buyback transaction undertaken by Cognizant's principal operating subsidiary in India. In that transaction, undertaken pursuant to a plan approved by the Madras High Court, Cognizant paid approximately $135 million (Rs 9 billion) in Indian income taxes, which it believes are all applicable taxes owed according to Indian law.

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Sanjay Singh
Sanjay Singh
Sanjay Singh covers startups, consumer electronics and telecom for TechObserver.in
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