Cognizant gets HC relief in I-T Dept's Rs 9,400 cr tax demand case

The Madras High Court has stayed the Income Tax Department's demand of ₹9,403.09 crore in tax from Cognizant Technologies in connection with the IT firm's share buyback of more than ₹19,000 crore in 2017-18.

However, the court has directed Cognizant to make a payment of ₹1,500 crore to the department within four weeks, as security against the tax demand while it decides whether the company was liable to pay dividend distribution tax on the buyback expenses.

A bench of Justice Mohammed Shaffiq and Justice R Mahadevan, in its order last week, said if the company failed in complying with the condition, the stay order shall stand vacated automatically and the tax department could "recover the tax liability from the appellant in the manner known to law".


On the tax lien against the demand, the bench directed the tax department to release the title deeds pertaining to property and remaining fixed deposits lying in banks after the company made the deposit. The tax authority in its submission said the outstanding demand raised against the company needed to be secured to protect the interest of the revenue department.

It also argued that the financial difficulty cited on the part of the company had no merit, as it had assets of around ₹21,644 crore as on March 31, 2022.