Hyderabad, Aug. 16: Mahindra Satyam on Monday said that it has won a lawsuit filed by Upaid in a US court against deduction of income tax on the amount to be paid by the Indian IT major for the settlement of a patents dispute.
“The Supreme Court of the State of New York has adjudged and declared that the settlement agreement requires that Upaid must cooperate with the escrow agent (IDBI Bank Ltd.) to allow the escrow agent to withhold any applicable taxes from the $70 million settlement amount,” Mahi-ndra Satyam said in filing to US stock exchanges.
The US firm will now has to pay 55 per cent tax on $70 million settlement amount, which works to around $38.5 million.
In December 2009, Mahindra Satyam had settled a US lawsuit filed by Updaid seeking damages from Satyam for forging documents relating to its patent application.
The Hyderabad-based IT firm agreed to pay $70 million for the deal. However, with three months after reaching the agreement, both the companies found themselves locking horns over who will pay income tax on the settlement amount.
Upaid wanted Mahindra Satyam to pay income tax on the settlement amount. But Satyam insisted that the settlement amount is an income to Upaid and hence, it has to pay the tax as per the Indian law.
The original case, which was settled in 2009, dates back to 2002, when Satyam Enterprise Solutions, a subsidiary of Satyam Compu-ter Services Ltd, had developed a software for Upaid.
Later, Upaid wanted to patent the technology and sought the signatures of the 20 Satyam employees, who worked on the project. By then, some of the employees who worked on the project moved out. But Satyam helped Upaid get these signatures, some of which later turned out to be forged.