IT dept sells Cairn shares to recover tax

The income tax department has sold roughly 40 percent of Cairn Energy plc's shareholding in Vedanta to recover a part of the Rs 10,247 crore retrospective tax it had raised against the British firm.

While an international arbitration tribunal is to begin final hearing in Cairn's challenge to the tax imposed retrospectively, ‎the I-T department realised USD 216 million from selling some of the firm's residual holding in Vedanta.

"As previously announced, the Indian Income Tax Department (IITD) has continued to enforce its retrospective tax claim against Cairn whilst the treaty arbitration has been ongoing.

"To date, the IITD has seized dividends due to Cairn from its shareholding in Vedanta Limited (VL) totalling USD 155 million and it has offset a tax rebate of USD 234 million due to Cairn as a result of overpayment of capital gains tax on a separate matter," Cairn Energy said in a statement.

The firm said it has now been notified by the IITD that it has sold part of its shareholding in VL, realising and seizing proceeds of USD 216 million.

"Following this sale, Cairn’s retained holding in VL is now approximately 3 percent. It is possible that the IITD may make further sales," it said.

The income tax department had seized nearly 10 per cent of Cairn's shareholding in its erstwhile subsidiary Cairn India after issuing a Rs 10,247 crore tax demand notice in January 2014. After Cairn India got merged with Vedanta, the shareholding came down to 5 percent.