 "Cairn drops retro tax suit")
Cairn India has withdrawn its petition challenging the validity of the retrospective law amendment of 2012 that imposed tax liabilities on the company.
The withdrawal, however, has a clause that the companies could go back to the court at any stage, sources familiar with the developments said. They added Cairn's decision followed the government's move to constitute a committee under the Central Board of Direct Taxes (CBDT) to review the existing system of appeals filed by the income-tax department regarding retrospective tax cases.
Also Read
In financial year 2006-07 (assessment year 2007-08), Cairn UK had transferred shares of Jersey-based Cairn India Holding to Cairn India. The total share transfer in India was valued at around Rs 26,000 crore, to be taxed at the rate of 30 per cent. The tax liability on capital gains appeared to be Rs 5,000-6,000 crore.
The I-T department had attached Cairn Energy Plc's 10.3 per cent stake in Cairn India, worth $1 billion as on December 31, 2013, with a view to selling these to recover the alleged tax dues arising from Cairn's restructuring of Indian assets.
Cairn Energy had earlier said it had been fully compliant with the tax legislation in force in each year throughout its history of operating in India.
The tax department had attached the shares after Cairn UK Holdings filed a 'no income' return in India in response to a showcause notice issued by the department.
The notice was issued in relation to Cairn's transfer of Indian assets to the then newly-formed Cairn India from offshore entities in Jersey in 2006-07. This transaction, claimed authorities, led to capital gains for Cairn UK Holdings, taxable in India.
Meanwhile, Cairn India Chairman Navin Agarwal on Wednesday called for a predictable tax and fiscal regime, together with maintaining contract sanctity to aid production increase.
"Simple policy framework, predictability of taxes and fiscal regime, maintaining contract sanctity and facilitating private-sector capital are key levers that have been effectively utilised by the US. This led to their energy renaissance," said Agarwal in an address to shareholders.
CLARIFICATION
An earlier version of this article had mentioned that Cairn Energy, Cairn India's former parent, had also withdrawn the petition, which is wrong. Cairn India had filed the petition and Cairn Energy had nothing to do with it. We have corrected the article and regret the error.
GOING EASY
Dec 2013
- Tax dept attaches $1 bn worth of Cairn India shares
2014
- Mar: The Delhi High Court gives Cairn three weeks to respond to the tax department's showcause notice
- May: Cairn India files a writ petition in the Delhi HC
- July: Cairn India withdraws the writ petition