31st Jan 2014 08:34
LONDON (Alliance News) - Cairn Energy PLC Friday pledged to defend itself in India as it claimed that the recent tax claim it had received from authorities was the result of a law brought in after the year affected by the claim.
In a statement, the company said it had re-confirmed with its advisers that it had been fully compliant with the tax legislation that was in force each year that it has operated in the country.
"The correspondence received from the Indian Income Tax Department indicates that this is in respect of amendments introduced in the 2012 Indian Finance Act which seek to tax prior year transactions under retrospective legislation," it said.
"Cairn intends to take whatever steps are necessary to protect the company's interests and to defend its position," it added.
Last week, Cairn confirmed that it had become the latest international company to be contacted by Indian tax authorities, which wanted to discuss its income tax assessments for its financial year to end-March 2007. It said it was co-operating with authorities.
While the discussions are taking place, the Income Tax Department has instructed Cairn to hold its shares in Cairn India Ltd. Cairn retains roughly a 10% investment in Cairn India, after it spun off the unit in 2006 and listed it in India a year later.
India has stepped up efforts to collect back taxes from major international companies as it tries to bring down its budget deficit. Companies including Vodafone Group PLC, Royal Dutch Shell PLC and IBM of the US are already embroiled in tax disputes in the country.
Cairn Energy shares were up 0.6% at 218.1 pence early Friday.
By Steve McGrath; [email protected]; @SteveMcGrath1
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