Judge Recuses Himself From Rs 2,800 Crore Cognizant Tax Dispute Case

When the Cognizant's plea challenging the tax demand by the Income Tax Department came up, the judge recused himself from the case, without assigning any reason.

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Judge Recuses Himself From Rs 2,800 Crore Cognizant Tax Dispute Case

Justice Sivagnanam referred the plea to Chief Justice Indira Banerjee to assign it to another judge.


Chennai: 

Justice T S Sivagnanam of the Madras High Court today recused himself from hearing the tax dispute case involving Cognizant Technology Solutions and the Income Tax Department.

When the Cognizant's plea challenging the tax demand by the Income Tax Department came up, the judge recused himself from the case, without assigning any reason.

Justice Sivagnanam referred the plea to Chief Justice Indira Banerjee to assign it to another judge.

The issue pertains to Rs 2,800-crore demand by the ITD from Cognizant towards dividend distribution tax (DDT) for remitting Rs 19,415 crore to its non-resident shareholders in the US and Mauritius towards buy back of 94,00,543 of equity shares in May 2016.

After the demand, the department has freezed the entire bank accounts of the company, prompting it to approach the high court.

In April last, as an interim measure, the court had ordered the firm to pay 15 per cent of the demanded amount in two days.

To facilitate the payment, the court had ordered unfreezing of the company's bank account with JP Morgan, Mumbai.

The primary allegation of the department is that Cognizant processed the buyback scheme ahead of the Finance Bill 2016 which came into effect on June 1, 2016.

The bill widened the scope of additional income tax payable on share buyback.



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