The Income Tax Department has seized a further Rs 440 crore of dividend income due to Cairn Energy Plc to recover a part of the Rs 10,247 crore tax demand it had raised on the British firm using a retrospective tax legislation.
The tax agency had previously seized Rs 666 crore of dividends due to Cairn from its 4.95 per cent residual holding in Vedanta Ltd. It has also refused to pay tax refund of Rs 1,594 crore due to Cairn as a result of overpayment of capital gains tax to recover the dues.
Sources said Vedanta, owned by billionaire Anil Agarwal, had last month declared for shareholders a Rs 21.2 a share dividend and a 7.5 per cent payment on preference shares. For Cairn, the total receivable came to about Rs 440 crore. But due to an Income Tax Department order, Vedanta transferred that money to a separate account. This was then taken over by the department.
The action comes ahead of the beginning of the final hearing in the arbitration initiated by Cairn to oppose the retrospective tax demand which was raised on a 2006 internal reorganisation of the firm’s India unit, called Cairn India. Read More