Cognizant Technology Solutions said it will deposit $75 million (Rs 490 crore), representing 15% of the disputed tax, to be kept in a suspense account by the income- tax department.
Cognizant Technology Solutions, the Nasdaq-listed IT services company with a majority of its employees based in India, said it will deposit $75 million (Rs 490 crore), representing 15% of the disputed tax, to be kept in a suspense account by the income- tax department. The Madras High Court on Tuesday directed the income tax department to lift the attachment of a JPMorgan account, while asking Cognizant to pay 15% of the `2,800-crore tax demand raised by the I-T department, in the next two days. Cognizant chief financial officer Karen McLoughlin said: “Our operations remain unaffected. This dispute is with respect to a lawful, fully reviewed and disclosed transaction, and we are pleased with the court’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 defence against the assertions of the Indian income tax department in this and other tax disputes.” The income tax department had frozen the bank accounts of Cognizant in excess of Rs 2,800 crore in Mumbai and Chennai over a dispute on the payment of dividend distribution tax (DDT). According to a company statement, 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 900 crore) in Indian income taxes, which it believes are all applicable taxes owed according to Indian law.