The income tax department has sold about 40% of Cairn Energy’s residual stake in Vedanta for $216 million, as it persisted with enforcing its $1.6-billion (Rs 10,247 crore) retrospective tax claim on the Edinburgh-headquartered energy major, even as the final arbitration hearing on the matter is slated to start in The Hague on August 20 and the arbitral ruling is expected by the end of the year. Legal experts said though the department’s move might not be technically wrong, it indeed appeared a hasty one. They also wondered whether it had obtained a direction from the arbitral tribunal in such a way that its interests will be safeguarded even in the event of an adverse award.
The department had earlier seized $155 million of Vedanta’s dividend due to Cairn and had chosen not to refund extra capital gains tax of $234 million paid by it. “Following this (stake) sale, Cairn’s retained holding in (Vedanta) is now approximately 3%. It is possible that the (tax department) may make further sales,” the company said in a statement. Cairn’s is the only case of the government realising a part of the monetary value of the disputed retrospective tax claims. Read More
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