The Income Tax (IT) department, to which the National Securities Depository (NSDL) had transferred all 180 million shares of Cairn Energy in Vedanta, has moved to dispose off the remaining 120 million shares of the British oil and gas major estimated to be worth £270 million at current prices, despite protests by the UK firm. The IT department has since February this year, sold off 60 million shares of Cairn Energy in Vedanta worth £158 millilon.
Tax authorities have in addition, appropriated dividends worth around £105.6 million in two tranches that Cairn Energy was to receive from Vedanta. The tax department has alleged that Cairn Energy had set up several subsidiaries, created cross-holdings in multiple entities and launched an IPO to raise money from Indian investors when it had decided to exit the country by repatriating IPO proceeds to its parent company in the UK. Spokesperson for Cairn Energy, Linda Bain said the information was disclosed several times before IPO.
“A portion of IPO proceeds were remitted to CIL’s parent company - as was disclosed to the FIPB, Sebi and is clearly laid out in the prospectus from 2006 and the annual accounts of the relevant entities in 2006. Proceeds from an IPO (a fresh issue of shares) have never been taxable in India, and still is not taxable,” Bain said. Sources in the I-T department, however, said, “Cairn India Ltd had informed Sebi and FIPB that it wants to bring inward investment in India for which it had shown $1.3 billion remittance, which later turned out to be a ‘daylight overdraft’ and the proceeds of the IPO, including the ‘daylight overdraft’ was actually outward investment.”
