I-T gets a week from Supreme Court to defend Rs 500 crore tax demand on IBM

NEW DELHI: The I-T Department on Friday sought one more week from the Supreme Court to defend the Karnataka HC order directing IBM to cough up by March 31, 2013, half of 1090-crore tax claim made by the department.

IBM counsel Harish Salve dubbed the demand "thoroughly illegal" and sought to challenge the HC order. "Where is the question of law?" he said of the HC order admitting the appeal filed by the revenue authorities. "Why did the Tribunal pass the order? Where is the question of law? We are as good as our money," Salve contended.

A three-judge bench, led by justice R.M. Lodha, directed that the case be listed again next Friday, after hearing preliminary arguments, at the insistence of department counsel K. Radhakrishnan who sought more time to place its views.

"Is the appeal (to the HC) maintainable? Where is the substantial question of law for the HC to tinker with the order of the Tribunal? The HC should spell out the question of law when it modifies an interim order of the Tribunal," Justice Lodha remarked. The top court asked the Department to defend the HC order tinkering with the ITAT order which asked the company to pay only 50 crore pending its appeal with the Tribunal. But the HC directed IBM to pay up half of 1090 cr by March 31, 2013, if it wanted to the claim not to be enforced. The company then moved the top court.

In two orders, passed on Jan 29, 2013, and Feb 4, 2013, the HC directed the company to pay half the demand. IBM claims to have so far paid a sum of 250 crores by way of taxes and is seeking a stay on payment of the balance sum till its appeal was decided.