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British oil firm Cairn Energy Plc said on Tuesday its holding in Vedanta Ltd has dropped to just 0.1 per cent after the Income-Tax Department sold most of its 4.9 per cent stake in the company to recover a retrospective tax demand.
Besides realising about ₹5,000 crore from selling the shares together with redemption proceeds on Vedanta preference shares, the I-T Department has also seized ₹1,140 crore of dividend due to the British company as well as ₹1,590 crore of tax refund in an unrelated case, Cairn said in its 2018 financial earnings statement.
The company reported a net loss of $1.1 billion in the year ending December 31, 2018 “resulting principally from a write-down of Cairn’s investments in India”, it said.
Cairn discovered India’s biggest onland oilfield in Rajasthan in January 2004. It later sold the India business, Cairn India, to Vedanta in 2011 for $8.67 billion. It, however, held a small stake of close to 10 per cent in the company. Cairn India was in April 2017 merged into parent Vedanta. Subsequent to that Cairn Energy held a 4.9 per cent stake in Vedanta.
Capital gains tax
In the earnings statement, Cairn said it had in January 2014 received a notice from the I-T Department, requesting information relating to the group reorganisation done in 2006.
Alongside, the Department attached the company’s near 10 per cent shareholding in Cairn India. In March 2015, the Department sought ₹10,247 crore in taxes on alleged capital gains made by the company in the internal reorganisation.
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