British Cairn Energy liable to pay ₹10,247 cr capital gains tax: ITAT

NEW DELHI: Tax tribunal ITAT as upheld levy of Rs 10,247 crore capital gains tax on UK’S Cairn Energy Plc but has held that interest cannot be charged on it as the demand was raised using retrospective tax legislation.

ITAT, in an order dated March 9, 2017, held that Cairn Energy was liable to pay the tax on share transfer it did through an internal reorganisation of its India business in 2006, prior to getting Cairn India listed on stock exchanges.

The tribunal also said that Cairn India should have withheld tax on capital gains made by its parent company. It was parallely sent a demand notice by the Income Tax department for not doing so. Cairn Energy had approached ITAT after it was slapped with an tax assessment order of Rs 10,247 crore in January 2014. Later, it also initiated international arbitration against the tax demand, which is still pending.

The I-T department had raised a total tax demand of Rs 29,047 crore on Cairn Energy, including Rs 18,800 crore in backdated interest. A similar tax demand was also raised on Cairn India, the Indian subsidiary of Cairn Energy which the British firm sold to Anil Agarwal’s Vedanta Group in 2011.

In its plea before the ITAT, Cairn Energy had said that the assessing officer had “erred” in raising tax demand by invoking the retrospective amendment to Section 9 of the Act introduced in the Finance Act, 2012, which was not on the statute when the India-united Kingdom Tax Treaty entered into force.

“It is therefore submitted that the taxability of the Appellant should have been deter- mined under the provisions of section 9(l)(i) the Act which were applicable when the India - United Kingdom Tax Treaty was entered into force,” Cairn Energy said.

The ITAT said the provisions of DTAA where it simply provides that particular income would be chargeable to tax in accordance with the provisions of domestic laws, such article in DTAA also cannot the limit the boundaries of domestic tax laws.“in view of this, we do not find any force in the argument of the assessee and dismiss ... the appeal,” ITAT said. MUMBAI: State-run Canara Bank, which has been struggling to sell non-core assets to shore up its poor core capital, today sold 13.45 per cent of its stake in its home finance arm Can Fin Homes to GIC of Singapore for Rs 753.8 crore or $113 million.

The stake, amounting to 35,80,849 equity shares each valued at Rs 2,105, was picked up by Caladium Investment, an affiliate of GIC, which is Singapore’s sovereign wealth fund, the bank said in an exchange filing. The sale price at Rs 2,105 a share is a 9 per cent premium to yesterday’s closing price and P/BV multiple of 5.5 times as of December 2016. Leading merchant banker JM Financial advised Canara Bank on the stake sale.

Late last month, the bank had informed the exchanges that it had appointed merchant bankers to divest its stake in another unlisted arm Canbank Factors, the conclusion of which is awaited.

The Can Fin Homes counter closed at Rs 1,977.65 or up 2.11 per cent on the BSE, which closed 0.06 per cent up on a volatile trade.

Canara Bank set up Can Fin Homes in 1987, and owned 44.1 per cent in the company as of December 2016 with the rest of the stake being held by the public.

After struggling with high bad loans, Canara Bank had reported a three-fold rise in net profit at Rs 322 crore for the December quarter. The Bangalore-based lender had reported a net profit of Rs 84.9 crore for the same quarter in the previous year.

Its NPAS rose to 9.97 per cent from 5.84 per cent in the same quarter a year ago.