Mahindra Satyam feels that the notices slapped by the Income-tax Department attaching its properties, including Info City where it is headquartered as “absurd”.
“Fictitious accounts and inflated balances are the premise on which the erstwhile Satyam Computers ran into controversy with former chairman B. Ramalinga Raju claiming that the balance sheet contained inflated accounts. How can we be asked to pay tax on fictitious income?” a top executive said.
The notice, the company claimed, follows the failure of the taxmen to encash Rs.617-crore bank guarantee valid till December 31 furnished by Mahindra Satyam in line with a direction issued by the Supreme Court in April. When the IT Department sought encashment of the bank guarantee after the deadline expired, Mahindra Satyam approached the Andhra Pradesh High Court seeking relief.
The High Court, in its interim order, directed both the parties, Mahindra Satyam and the IT Department, to maintain a status quo on the matter until further orders and posted the issue for hearing on February 28.
The company, however, made a provision of Rs.511.07 crore during the current fiscal, against Rs.380.34 crore as of March 31, 2011, for taxation.
Considering the effects of financial irregularities, status of disputed tax demands and other issues pending with various authorities and the uncertainty surrounding the outcome of these issues, it has been advised that it was not appropriate to make adjustments to the provisions pertaining to previous years at this stage.
