The Income Tax Department has served a Rs 261.4 crore (Rs 2.614 billion) demand notice on Wipro pertaining to its software profits, but the IT major said on Friday that it would file an appeal against it.

"We have been served with a demand of Rs 261.4 crore by the assessing officer pursuant to an assessment under the Income Tax Act, 1961, primarily on account of denial of the deduction under Section 10A for the software profit we earn out of STP units located in Bangalore," Wipro company secretary V Ramachandran said in a statement in Bangalore.

"We have decided to file an appeal before the Commissioner (Appeals), the first appellate authority," Wipro said.

"We have been advised that the demand is not sustainable since neither is it consistent with the decisions of the Supreme Court and other judicial precedents, nor in line with legislative intent," Ramachandran said.