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Facing a potential tax demand on alleged capital gains of ₹24,500 crore it made seven years back, London-listed Cairn Energy Plc on Thursday said it will assess impairments on the value of its shareholding in Cairn India in three months.
Income Tax authorities in January contacted Cairn Energy over the alleged capital gains it made when in 2006-07 it transferred all its India assets to a new company – Cairn India.
While the firm maintains that none of the transactions undertaken by it during that fiscal were taxable in India, the Income-Tax Department restrained it from disposing of its about 10 per cent remaining equity in Cairn India.
“Cairn continues to engage with the Indian Income-Tax Department and will also pursue the matter with the new Indian Government,” the company said.
The company had in April this year received two more notices asking it to file tax return for 2006-07 as well as a show-cause notice for not withholding tax on dividends paid by Cairn UK Holdings Ltd to its parent company Cairn Energy.
“Cairn has filed a nil return for the 2006-07 year,” the statement said.
The Income-Tax Department has cited legislation introduced in 2012, with retrospective effect, as the reason for these current enquiries.
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