UK-based Cairn Energy PLC has said that the income-tax department has instructed the company to hold its shares in the Indian subsidiary Cairn India.
“Cairn has been contacted by the Income-Tax Department to discuss income-tax assessments for the year ending March 31, 2007. Cairn is co-operating to provide the necessary documentation and information as requested,” Cairn said in a statement.
Recently, I-T sleuths visited Cairn India’s office at Gurgaon in Haryana, and conducted a survey.
“Cairn India is fully compliant with all Indian income-tax laws and the income-tax assessments including transfer pricing assessment has been completed for 2006-07,” said the Cairn India spokesperson earlier.
Cairn India is one of the highest contributors to the Indian exchequer by way of taxes and royalties; Cairn’s gross contribution to the exchequer is in excess of Rs 24,000 crore for the current year. As in the past, Cairn India will be more than happy to provide any documentation or information to the authorities, the official had said.
The private explorer’s former promoter, the Edinburgh-based Cairn Energy, mopped up Rs 8,616 crore after launching an initial public offer. In 2011, it sold chunk of its stake to Anil Agarwal-promoted group for $8.67 billion.
According to a media report, “The total share transfer or capital gains accrued in India was valued at Rs 26,000 crore, to be taxed at a rate of 30 per cent. The tax liability shall be raised on a non-resident company, Cairn UK , since it was the transferor and (was) filing its tax return in India from 2010 onwards. The tax liability on capital gains as of now appears to be over Rs 5,000 crore and could go up.”