Millennium Post

I-T Dept sells more Cairn Energy shares to recover retro tax

New Delhi: The Income Tax Department has sold more of Cairn Energy Plc's shares in mining major Vedanta Ltd to recover a part of the Rs 10,247 crore retrospective tax demand, the British firm said Tuesday.

The Income Tax Department, which had in May and June sold a little under 2 per cent Cairn's holding in Vedanta for about $231 million, sold a further one per cent last month when an international arbitration tribunal was holding the final hearing in The Hague against the imposition of a retrospective tax.

Cairn in its half-yearly report announcement Tuesday reported a loss of $500.5 million as a result of the de-recognition and loss of financial assets in India.

"At 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.

"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 Energy said in the statement.

It said the IITD had continued to enforce its retrospective tax claim against Cairn whilst the arbitration, initiated under the UK-India Bilateral Investment Treaty, has been ongoing.

"To date, the IITD has seized dividends due to Cairn from its shareholding in VL totalling approximately $162 million and it has offset a tax rebate of $234 million due to Cairn as a result of overpayment of capital gains tax on a separate matter," it said.

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