Cairn En­ergy starts ar­bi­tra­tion to seek Com­pen­sa­tion from in­dia

Resource Digest - - NEWS IN BRIEF -

Bri­tish ex­plorer Cairn En­ergy plc said it has ini­ti­ated an in­ter­na­tional ar­bi­tra­tion to seek $5.6 bil­lion in com­pen­sa­tion from the In­dian Gov­ern­ment in case a ret­ro­spec­tive tax de­mand of Rs 29,047 crore is not quashed. In its half-yearly earn­ings state­ment, the com­pany said its sub­sidiary Cairn UK Hold­ings Ltd has re­ceived an as­sess­ment order from the In­dian In­come Tax Depart­ment re­lat­ing to the in­tra-group re­struc­tur­ing un­der­taken in 2006 prior to the IPO of its In­dia unit, which cites a ret­ro­spec­tive amend­ment to In­dian tax law in­tro­duced in 2012.

“Cairn strongly con­tests the ba­sis of this at­tempt to ret­ro­spec­tively tax the group for an in­ter­nal re­struc­tur­ing,” it said in the state­ment. The as­sess­ment order levies a tax of Rs 10,247 crore plus Rs 18,800 crore of in­ter­est back dated to 2007. “The to­tal as­sets of CUHL have a cur­rent value of $475.2 mil­lion (about Rs 3,180 crore), com­pris­ing prin­ci­pally the group’s 9.8 per cent share­hold­ing in Carin In­dia Ltd and any re­cov­ery by the In­dian au­thor­i­ties would be lim­ited to such as­sets,” the state­ment said.

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