MARCH 28: The Delhi High Court has told state-run Mahanagar Telephone Nigam Ltd (MTNL) to pay the government Rs 2.0 billion in tax arrears by March 30, the company said in a statement on Tuesday. This is almost double the amount MTNL had offered to pay."The High Court. has directed MTNL to pay Rs 2.0 billion by March 30, 2000, against the offer of MTNL to pay Rs 1.05 billion," the statement said. The government's income tax department had approached MTNL's banks, asking that they pay Rs 2.18 billion said to be owed by the company in tax arrears.MTNL, owned 56 per cent by the Government, offers fixed-line phone and Internet services in Bombay and New Delhi. It plans to start a mobile phone service in the two cities by this June. In reaction to the income tax department's move, MTNL filed a petition in the Delhi High Court on Tuesday.The court "has admitted our writ petition and fixed for April 26, 2000 the date of the hearing", the MTNL statement said, adding that the income tax department had been asked to vacate the attachment orders issued to the company's banks.MTNL chairman and managing director Srinivas Rajagopalan told Reuters the increased pay-out for the arrears would not have an impact on the bottom line of his company.The company pays about 22.5 per cent of its revenues to the Department of Telecommunications (DoT) as licence fees every year, which the income tax department has refused to accept as expenditure and wants to levy taxes on.The firm's revenues in 1998/99 (April-March) were Rs 52.47 billion, which is expected to grow about 12-13 per cent in 1999/2000."We will net the increased tax against what (the licence fee) we pay the DoT," Rajagopalan said. "Therefore, I don't think it will have an impact on the bottom line of my company."Earlier on Tuesday, Rajagopalan denied a report in the Hindustan Times daily that his firm's financial transactions were at a standstill and that its accounts had been frozen by income tax officials."We have ensured that none of the cheques we have issued is being dishonoured by the bank. there is absolutely no financial crisis," said Rajagopalan.Rajagopalan said MTNL's assets with the banks amounted to about Rs 20 billion and there was no reason for any fears about the company's financial position. Shares of the company are due to be listed on the New York Stock Exchange in the next few weeks.MTNL's share closed Tuesday at Rs 245 on the Bombay Stock Exchange, down Rs five from Monday's close. The share dipped to Rs 231 on Tuesday on news of the income tax department move, dealers said.
