Cafe Coffee Day on Sunday said that there is no tax liability on the company and its subsidiaries and action will be taken in the next few days to release the shares of IT firm Mindtree that have been attached by the Income Tax Department.

According to Mindtree, a prohibitory order from the Assistant Commissioner of Income Tax, Central Circle, Bengaluru, issued on January 25, restricted the transfer of 24 lakh equity shares of VG Siddhartha’s 52,70,000 shares and Coffee Day Enterprise’s 22,20,000 shares, totalling 4.5 per cent. Siddhartha, who is the founder of Cafe Coffee Day, is one of the largest shareholders of Mindtree. Apart from a 3.6 per cent stake in Mindtree directly, Siddhartha holds 10.64 per cent through Coffee Day Enterprises and 6.45 per cent through Coffee Day Trading.

The notice from the I-T Department invoked the “provisional attachment” clause under Section 281B of the Income Tax Act, and was sent to stock exchanges. In the notice, the tax authorities said the decision to prohibit transfer was taken to “safeguard the interest of the revenue in respect of possible future tax and penalty obligations in respect of open assessments”.

With the I-T Department restricting Mindtree from transferring the shares of VG Siddhartha and Coffee Day Enterprises for six months, there are fears that the sell-off of the mid-size IT company could be delayed.

Siddhartha is said to be in talks with private equity majors like KKR for selling his stake. According to reports, L&T is also eyeing a majority stake in the IT company. Siddhartha is one of the early investors in Mindtree and had bought a 6 per cent stake in 1999 at the time of its inception.

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