Govt recalls tax demand of R617 cr on Satyam

Attorney general GE Vahanvati told a bench headed by Chief Justice SH Kapadia that the Central Board of Direct Taxes will recall last months order.

The government on Friday recalled its tax demand of Rs 617 crore on Satyam Computer Services following the Supreme Courts directive to the income tax department to compute the scam-hit companys tax liability after expunging the fictitious sales income.

Attorney general GE Vahanvati told a bench headed by Chief Justice SH Kapadia that the Central Board of Direct Taxes will recall last months order.

We would set aside March 10 order. We would give them a hearing and pass a well-reasoned order, Vahanvati said,while opposing Satyam counsel Gauri Rasgotra’s plea to de-freeze the firms bank account having Rs 1,800 crore.

The court posted the matter for hearing on Monday.

The counsel for Satyam now known as Mahindra Satyam submitted that the company urgently needed money to pay salaries to its employees and to pay $10 million to the US Securities and Exchange Commission to settle probes into an accounting fraud.

Vahanvati,however,opposed the plea,saying the company already has cash reserves of Rs 1,800 crore. Let the money remain with us. If after that revised process,if they are entitled,we will refund them, he added.

While assuring the IT firm that its interest would be protected,the bench continued its April 6 status quo order.

You would be protected. Right now your main grievance is that you were not heard by the CBDT, the bench said.

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The court on April 6 had directed the CBDT to work out the actual income-tax liability of Satyam Computers after omitting fictional sales income.

The CBDT tax claim was based on Rs 345 crore foreign tax credit availed of by the former management of the distressed IT firm,which the present leadership believes to be forged.