The Karnataka High Court has modified its interim order on a tax case against IBM India.
Now, it has allowed the Income Tax Department to collect half the Rs 1,090-crore tax demand claimed by the department for assessment year 2008-09.
In its interim order issued on January 29, the court had stayed the interim order of the I-T Appellate Tribunal, which had asked the company to deposit Rs 50 crore. The department, however, challenged this in the high court. It said the tribunal’s order to deposit Rs 50 crore, against the demand of Rs 1,090 crore on the basis on the submission by the assessee (IBM India), “has caused financial hardship and irreparable injury to the exchequer”.
According to the modified order, IBM would have to deposit half the claim amount on or before March 31. The court also asked the Income Tax Appellate Tribunal to expedite the hearing of the appeal.
In an emailed statement, an IBM spokesperson said the company wouldn’t comment on current proceedings.
According to reports, earlier, IBM India had claimed deductions for income earned by exporting software and services from STPI (software technology park of India) units under Section 10A of the Income Tax Act. However, the department had reportedly found while IBM had units both in and outside the STPI zone, it hadn’t maintained separate books of accounts. Therefore, it rejected IBM’s claim for deduction.
