Cairn Adds Another $249 Million To Compensation Claim From India

New Delhi: British oil explorer Cairn Energy plc has added another $249 million to the compensation it is claiming from India after the government set off a tax refund due to it to settle part of a retrospective tax demand. Cairn had before an international arbitration tribunal in July last year sought $5.6 billion in compensation from the Indian government for raising a retrospective tax demand of Rs 10,247 crore on a decade old internal reorganisation of its India unit. In its half-year financial and operations statement, the company said the government had raised Rs 18,800 crore as interest on the principal tax demand. The interest demand was quashed by the Income Tax Appellate Tribunal. "Following that, the Income Tax Department issued a revised demand including interest running from February 2016 i.e. 30 days after the date of the assessment order. That interest currently amounts to Rs 1,440 crore (approximately $224 million)," the statement said. To recover this, the tax department "seized" $104.7 million of dividend income due to it from Vedanta Ltd, where it holds about 5 per cent stake, Cairn said, adding it has since written off the dividend income. "A tax refund in respect of financial year 2011-12 in the amount of Rs 1,590 crore ($249 million) which became due to Cairn as a consequence of a successful appeal by the company to the Delhi High Court has also been directed to the Income Tax Department to be set against the 2006-07 (retrospective tax) liability and Cairn's claims under the international arbitration have been adjusted to include this," it said. The company said it commenced international arbitration proceedings against India under the UK-India Bilateral Investment Treaty in 2015 for "expropriating Cairn's property without adequate and just compensation, denying fair and equitable treatment to Cairn in respect of its investments and restricting Cairn's right to freely transfer funds in connection with its investment." Cairn's holding in Vedanta Ltd has been attached by the Income Tax Department. In its Statement of Claim before the arbitration tribunal, the company said it has stated that applying the retrospective amendment and seizing $1 billion worth of shares was in breach of the Treaty's requirements of fair and equitable treatment and its protections against expropriation. "Cairn has asked the arbitration panel either to order India to withdraw its unlawful tax demand and compensate Cairn for the harm suffered by the seizure of the shares, being not less than $1.1 billion (plus costs); or, if the tax demand remains in place, compensate Cairn for the quantum of the tax assessment and the harm suffered by the seizure of the shares. These claims were subsequently updated to include the $249 million tax refund," the statement said. The company said based on detailed legal advice, it is confident that it will be successful in such arbitration. "The total assets of Cairn have a current value of $863.1 million (comprising principally the group's shareholding in Vedanta Ltd) and any recovery by the Indian authorities would be limited to such assets," the statement added..(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

Cairn Adds Another $249 Million To Compensation Claim From India

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