The income tax department would give its views on the proposed merger of Vedanta with Cairn India to the registrar of companies...
The income tax department would give its views on the proposed merger of Vedanta with Cairn India to the registrar of companies (RoC) who is responsible for recommending the amalgamation scheme to the high court.
Officials said amalgamation of two companies resulting in a company that is a tax resident in India is exempt from capital gains tax, although it amounts to transfer of shares in the pre-merged entities, as per the Income Tax Act.
Officials also said they are yet to look into the facts of the transaction as per which minority shareholders of Cairn India would get one equity share and one 7.5% preference share in Vedanta for every share held in Cairn India. Tax department usually gives its views to the RoC so that any outstanding tax demand is brought to the notice of the court and would be honoured even after the merger.
Vedanta Resources chairman Anil Agarwal met finance minister Arun Jaitley on Monday and apprised him of the transaction.
Cairn India is also confronting a Rs 20,495 crore tax demand the department had raised in March under retrospective changes to the law made in 2012 for alleged failure to withhold tax on capital gains made by its erstwhile promoter Cairn Energy in an internal re-organsiation of its Indian assets. The merged entity will have to deal with the tax demand post amalgamation. Cairn India, which does not agree with the tax demand, had challenged it in the Delhi High Court.