Cairn India under I-T scanner over assets transfer

Jan 22 2014, 14:28 IST
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Cairn Energy has transferred shares of the Indian assets that were held in a subsidiary incorporated in Jersey, a tax haven,to newly incorporated Cairn India. Cairn Energy has transferred shares of the Indian assets that were held in a subsidiary incorporated in Jersey, a tax haven,to newly incorporated Cairn India.
SummaryCairn Energy Plc had transfered the India assets into the newly incorporated Cairn India Ltd.

The Income Tax department has 'surveyed' the office of nation's largest oil producer Cairn India Ltd in connection with transfer of assets by its erstwhile UK promoter, Cairn Energy Plc to the Indian entry.

The Gurgaon office of Cairn India was 'surveyed' by I-T department officials yesterday for a short duration, informed sources said.

The survey was to establish if any capital gains tax was due on the 2006 transaction when Cairn Energy had transferred shares of the Indian assets that were held in a subsidiary incorporated in Jersey, a tax haven, to newly incorporated Cairn India.

Sources said I-T Department is investigating the asset transfer under Section 9 of the Income Tax Act, which deals with income deemed to accrue or arise in India.

Any tax demand, if established, may be raised on Cairn Energy plc of UK, they said.

Cairn Energy Plc had transfered the India assets into the newly incorporated Cairn India Ltd and listed the firm on the stock exchanges through an initial public offering (IPO).

The Edinburgh-based firm, which raised Rs 8,616 crore in the IPO in 2011, sold its majority stake in Cairn India to mining group Vedanta Group for USD 8.67 billion.

When contacted, a Cairn India spokesperson confirmed a "visit" by IT officials for "just a survey" and said the requested information was provided to them.

"Cairn India is fully compliant with all Indian Income tax laws and the income tax assessments including transfer pricing assessment has been completed for FY 2006-07.

"Cairn is one of the highest contributors to the exchequer by way of taxes and royalties; Cairn's gross contribution to the exchequer is in excess of Rs 24,000 crore for the current year (fiscal). As in the past, Cairn India will be more than happy to provide any documentation or information to the authorities," the spokesperson added.

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