The Madras High Court Tuesday dismissed a batch of petitions from IT major Cognizant challenging the recovery proceedings initiated by the income tax department for non-payment of Rs 2,912.25 crore dividend distribution tax.
Justice K Kalyanasundaram granted liberty to the petitioner to raise all the issues before the Dispute Resolution Panel (DRP) within two weeks.
"If objections are made within the time, the DRP shall consider the same on merits and in accordance with law," the judge added.
The tax issue pertains to unpaid dues around share purchases done by Cognizant Technology Solutions India, which had bought back shares from foreign owners -- Cognizant Mauritius and the US-based parent Cognizant Technology Solutions (CTS).
Cognizant Mauritius and the US-based IT firm had also challenged the recovery proceedings.
The issue pertains to payment of tax at the rate of 15 per cent while remitting Rs 19,415 core to its non-resident shareholders in the US and Mauritius towards buyback of 94,00,543 of its equity shares in May 2016.
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The Income Tax Assessment Authority had initiated recovery proceedings on the ground that the shares were overvalued which were challenged by the company in a batch of petitions.
Dismissing the pleas, Justice Kalyanasundaram said various Supreme Court and high courts have held that the assessee has an "appeal remedy" under Section 246 of the income Tax Act.
"In this case, an unsuccessful attempt has been made by the petitioner to bypass the appeal remedy, but, I find no valid ground to entertain the writ petitions.
In that view, the petitions are dismissed as not maintainable at this stage."
Keeping in mind the principles laid down in various other cases and the facts of this case, the judge said in his opinion, these writ petitions were not maintainable "at this stage."