Paid all applicable taxes, I-T dept’s position without merit: Cognizant

US-based IT firm Cognizant said it paid all applicable taxes related to its buyback transaction in 2016 and the Indian Income Tax Department’s (ITD) position is “contrary to law and without merit”.

The tech giant’s comments follow ITD’s freezing its certain bank accounts in the country over a dispute on payment of dividend distribution tax (DDT) running into hundreds of crores.

Cognizant said it will “continue to vigorously defend itself and will pursue all available legal remedies”.

In an e-mailed statement, a Cognizant spokesperson said the company’s business operations and its work with clients were “not impacted by actions recently attempted by the Income Tax Department”.

The spokesperson said the Chennai High Court heard the matter yesterday and has instructed the ITD not to take further action pending hearings.

“The company believes that the positions taken by the Indian Income Tax Department are contrary to law and without merit. Cognizant has paid all applicable taxes due on the transaction at issue,” the statement added.

The tax issue pertains to unpaid dues around share purchases done by its subsidiary, Cognizant Technology Solutions India, which had bought back shares from foreign owners — Cognizant Mauritius and the US-based parent Cognizant Technology Solutions (CTS).

Cognizant is headquartered in the US but a majority of its total employees (2.6 lakh people) are based in India.