7th Apr 2015 07:49
LONDON (Alliance News) - Vedanta Resources PLC on Tuesday said its Cairn India Ltd subsidiary has filed a writ petition in New Delhi against the tax demand issued against the company by Indian tax authorities.
Cairn India received an order from the Indian Income Tax Department in March for an alleged failure to deduct withholding tax on alleged capital gains arising in 2006-7, when the company was owned by Cairn UK Holdings Ltd, a subsidiary of Cairn Energy PLC.
In late March, Vedanta had said it had served a notice of claim under the UK-India bilateral investment treaty to protect its legal position and shareholder interest in light of the retrospective tax demand.
The amount demanded from Cairn India totals around USD3.29 billion, Vedanta said, half in tax and half in interest. Vedanta owns 59.8% of Cairn India.
If enforced, Vedanta said the demand would have significant consequences for Cairn India and Vedanta's investment in the company. It added a parallel tax demand has been made by Indian tax authorities on Cairn UK Holdings Ltd.
Under the bilateral investment treaties that India has with many countries, foreign investors are covered by various protections. There are also clauses within the treaties covering dispute resolution.
Shares in Vedanta were up 2.6% to 491.70 pence on Tuesday morning.
By Sam Unsted; [email protected]; @SamUAtAlliance
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