Fresh sale to recover Cairn tax
The income-tax department has sold more of British oil firm Cairn Energy's share in mining major Vedanta, in a move to recover part of the government's retrospective tax demand of Rs 10,247 crore.
- Published 12.09.18
New Delhi: The income-tax department has sold more of British oil firm Cairn Energy's share in mining major Vedanta, in a move to recover part of the government's retrospective tax demand of Rs 10,247 crore.
"On January 1, 2018, Cairn held 4.9 per cent of the listed equity shares in Vedanta Ltd (VL). During late May and early June 2018, the Indian income tax department (IITD) instructed the sale of 1.7 per cent of Cairn's shareholding, seizing the resultant proceeds. This has resulted in a loss on de-recognition of $230.8 million during the six month period to June 30, 2018," Cairn Energy said on Tuesday.
"Further sales of 1.1 per cent were instructed in August and September 2018, reducing Cairn's shareholding in the listed equity shares to 2.1 per cent," Cairn said.
The Central Board of Direct Taxes (CBDT) had stated that "there is no legal advice against the sale of the attached shares". The tax department had come close to selling the shares in March but dropped the move at the last moment.
In January 2014, the tax department had used a two-year-old retrospective tax law to raise a Rs 10,247-crore demand on alleged capital gains made by Cairn Energy on a decade-old internal reorganisation of the Indian business. This was followed by attaching the company's residual 9.8 per cent shares in its erstwhile subsidiary, Cairn India.
Cairn India was subsequently merged with its new parent Vedanta, in which Cairn Energy held about 4.95 per cent.
Cairn said the Indian tax authorities have continued to enforce its retrospective tax claim against the company, while the arbitration initiated under the UK-India Bilateral Investment Treaty has been continuing.