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The Delhi High Court today granted three weeks time for Anil Agarwal-led Cairn India to respond to a show cause notice by the income tax department for an alleged failure to deduct withholding tax on alleged capital gains to Cairn UK Holdings Ltd in 2006-07.
"The Hon'ble High Court of Delhi has granted three weeks' time to evaluate the show cause notice and respond appropriately. Cairn India has always been fully compliant with all Indian Income tax laws. Income tax assessments including transfer pricing assessment has been completed for FY 2006-07.
Cairn India is one of the highest contributors to the exchequer by way of taxes and royalties; the company's gross contribution to the exchequer is in excess of Rs 24,000 crore for the current year," the company said in a statement today. Cairn Energy had transferred the India assets to Cairn India.
The company later got listed in Indian stock exchanges through an initial public offering. The company is under I-T scanner based under the retrospective tax amendment, following the asset transfer.
The income tax department had also seized the company's assets in India by barring it from selling shares in Cairn India. Cairn Energy holds10% in Cairn India valued at around $1 billion at the end of December 2013. It had in 2011 completed the sale of 40% to Vedanta Resources.
In all, it sold off around 52% in three tranches, returning about $4.5 billion to its shareholders.
When Cairn Energy raised $2 billion after listing the Indian outfit on the NSE and Bombay Stock Exchange in January 2007, it retained a 69% shareholding in the company.
