Court orders de-freezing of CTS accounts

Court orders de-freezing of CTS accounts

The Madras High Court on Tuesday ordered the Income Tax Department to de-freeze accounts of Nasdaq-listed Cognizant Technology Solutions (CTS), and asked the software firm to pay 15% of the total tax demand of Rs 2,800 crore in two days. The court also stayed the proceedings of the I-Tax Department.

The 15% of the total tax demand works out to around Rs 400 crore. Justice T S Sivagnanam, who passed the interim order, asked the I-Tax Department to immediately de-freeze Cognizant's bank account with JPMorgan, Mumbai to facilitate the payment of the interim amount.

CTS had moved the Madras High Court last week against the I-T Department freezing some of its bank accounts in Chennai and Mumbai. On Tuesday, CTS argued before the court that more than 60 bank accounts being held by the company were frozen by the I-T Department, without following laid-out procedures.

"There shall be an order of interim stay of impugned proceeding, subject to the condition that the petitioner pays 15% of the tax demanded, and furnishes a bank guarantee or security by way of fixed deposit for the remaining taxes demanded," the Judge said in his order.

The court also asked CTS to provide securities to the balance tax demand within a week for de-freezing of all other accounts, except those taken as security. I-T officials had, last month, attached a few bank accounts held by CTS for allegedly evading dividend distribution tax to the tune of Rs 2,800 crore.

Reaction from Cognizant was awaited at the time of going to print.

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