Cognizant liable to pay dividend distribution tax on shares buyback: ITAT

The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has dismissed an appeal of Cognizant Technology Solutions India and ruled that the company is liable to pay Dividend Distribution Tax (DDT) on buyback of Rs 19,000 crore worth of shares under a scheme of arrangement. Dismissing the appeal of Cognizant Technology Solutions India, ITAT held that the consideration paid by the company for purchase of its own shares in accordance with the scheme sanctioned by the Madras High Court "amounts to distribution of accumulated profits which entails release of all or part of assets of a company on reduction of capital which attracts provisions of Sec.2(22) of the Income Tax Act, 1961." Cognizant Technology Solutions in the assessment year 2017-18 purchased 94,00,534 equity shares of face value Rs 10 from its shareholders based in the US and Mauritius at Rs 20,297 apiece for a total consideration of Rs 19,080.26 crore in accordance with a scheme approved by the Madras High Court. On ..

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