Cairn Energy plc, the business giant based in Scotland, might have to face a heavy tax demand from I-T department. The department sent two tax notices to Cairn Energy plc in regards to the capital gains amounting to Rs 24,500 crore, the company made 7 years ago while it transferred its India assets to Cairn India.
After the asset transferring, Cairn Energy released IPO for Cairn India on the stock market, raising a whopping amount of Rs 8,616 crore.
The first notice sent by I-T dept. states that Cairn Energy plc is to file the tax return for the fiscal year 2006-07. The second notice states that CUHL should have withheld tax on dividends paid to Cairn Energy, its parent company.
Cairn Energy plc has decided to counter both the notices head on. The spokesperson said that the transactions made by the company during the fiscal 2006-07 were not taxable in India. The spokesperson further added, “Since the beginning of its business operations in India, Cairn has always been compliant with the taxation norms. Though we are open to the scrutiny of the tax authorities, we will take a firm stand when it comes to protecting the company’s interests.”
As of now, there are no tax demands but the company has been ordered by the I-T department to not pledge or mortgage their shares. Further, the tax authority has put restraining orders on Cairn on transfer of the 10.3% stake, it holds in Cairn India. The stake is worth over Rs 6,025 crore. The rest of the stake was earlier sold to Vedanta.