The Income-Tax Department stood firm on its over ₹20,000-crore tax demand on Cairn India even as promoter Anil Agarwal’s Vedanta Group has rolled out a merger proposal for the company with Vedanta Ltd.

Anita Kapur, Chairperson of Central Board of Direct Taxes (CBDT), said: “We have a provisional attachment order. We will ensure that our position is secured.”

The department has sent four tax notices to Cairn Energy Plc and Cairn India seeking ₹20,495 crore. The tax demand to Cairn India is for failing to deduct withholding tax on alleged capital gains made by former promoter Cairn Energy Plc. The matter is now under litigation.

Asked whether the matter was referred to a high-level committee as announced by Finance Minister Arun Jaitley last year, Kapur replied in the negative. The company wanted the matter to be referred to the Committee set up to ensure fair treatment in cases arising out of the retrospective tax amendment.

“Notice was issued almost a year back, while assessment has been completed now,” she told mediapersons.

Cairn Energy Plc holds a 9.82 per cent stake in Cairn India. The tax authorities have barred the company from selling its stake till the dispute is resolved.

To successfully conclude the merger process, Vedanta would like the tax issue to be closed. Meanwhile in a statement, Cairn Energy Plc said that it will assess whether the proposal to merge Cairn India with Vedanta Ltd is in its interest as a shareholder.

MAT challenge As regards levy of minimum alternate tax (MAT) on foreign institutional investors (FII), Kapur said the Justice AP Shah committee had been set up as part of the government’s efforts to iron out issues otherwise it would be answerable to agencies such as the Central Bureau of Investigation, Central Vigilance Commission and the Comptroller and Auditor General of India.

Kapur said that the government will not raise any MAT demand if the Shah committee sees no merit in it.

The committee was set up in the backdrop of the government claiming to have raised a tax demand of ₹40,000 crore from FIIs.

comment COMMENT NOW