Delhi High Court seeks government's reply on Cairn's plea against tax demand
April, 19th 2016
The Delhi High Court today sought government's response on a plea challenging Rs 20,495 crore tax demand slapped on Cairn India by the Income Tax Department for allegedly failing to pay taxes on gains made by its former parent firm in a share transfer transaction eight years ago.
A bench of Justices Badar Durrez Ahmed and Sanjeev Sachdeva also issued notice to the concerned ministry seeking its reply by August 4 on Cairn India Ltd's (CIL) plea against the IT department's demand.
Cairn has challenged the demand on the ground that there has been "unreasonable and atrocious" delay on part of the authorities who exercised their power "unreasonably" while making the demand.
During a brief hearing, Cairn, represented by senior advocate Harish Salve, told the court they were consulting the government on Rs 20,495 crore tax demand to resolve the issue.
"The central government has announced about settlement of retrospective tax cases during 2016 Budget," Salve said.
"We are considering the government's settlement proposal," he said, adding "as of now there is no outcome".
The government in this year's budget had offered one-time settlement of cases emanating from retrospective amendment of tax laws, by asking companies to pay the basic tax demand and get a waiver for interest and penalty.
Cairn has sought quashing of the IT department's demand order saying the proceedings were initiated after a lapse of over six years from the end of the 2006-07 financial year.
It said the courts have held that such proceedings should be initiated within a reasonable period of four years.
It also said it had in 2006 carried out an internal group reorganisation through 100 per cent share swaps, to facilitate initial public offer of CIL, and there would be no capital gains in such a process.