The Hindu Business Line : I-T Dept slaps Rs 50-cr notice on Infosys

`The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the company's financial position and results of operations.'

Bangalore , May 2

INFOSYS Technologies Ltd has been asked to pay an additional Rs 50 crore as tax for the year ended March 2002 by the Income-Tax authorities after the company was denied some exemptions under the I-T Act.

The I-T authorities on April 15 demanded Rs 50 crore as additional tax, including interest of some Rs 15 crore, after completing their tax review for the year, Infosys said in a filing to the Securities and Exchange Commission (SEC) recently.

However, Infosys has not made any provisions for this latest tax demand, sources said.

"We intend to contest the demand and the management and its tax advisors believe that the company's position will likely be upheld in the appellate process," Infosys said in the filing.

The I-T department denied tax exemptions to Infosys under Section 10A of the I-T Act on some expenses incurred by the company in foreign currency.

"The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the company's financial position and results of operations," the company said.

Recently, Wipro was also asked to pay an additional Rs 262 crore as income-tax for the year ended March 2002.

Raises guidance: Meanwhile, Infosys has marginally raised its guidance under US GAAP for the year ending 2006.

In an SEC filing, it said that its earnings per ADS have been revised to $1.95-$1.98, compared with $1.92-$1.95 announced on April 14, due to a change in the accounting requirements relating to stock options under US rules.

While issuing the guidance for the year, Infosys had made a provision of $8 million towards expenses relating to the grant of employee stock options.

However, with the adoption of accounting standards SFAS 123 R being postponed to April 1, 2006 by the SEC, compared to the earlier deadline of July 1, 2005, the company feels that the charge may not be there.

Hence this upward revision of three cents in guidance, the sources said, adding that there will not be any change in the guidance issued under the Indian accounting standards.

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