Cairn India shares fell nearly 4 per cent to a new 52-week low on Monday and headed for their ninth fall in 10 sessions. The trigger for the latest selloff is a Rs 20,495 crore tax demand slapped in relation to the 2007 listing of the company.
Here are the 10 developments:
1) Cairn Energy and Cairn India join Vodafone, Royal Dutch Shell, IBM and Microsoft -- firms that are involved in tax-related litigation in India.
2) The slew of tax case owe their origin to retrospective tax law - a 2012 amendment allowing taxation of indirect transfer of shares in the past.
3) Cairn Energy, the former parent of Cairn India, said last week that it had filed a formal dispute against a Rs 10,247 crore tax demand on capital gains the company made in 2006 while transferring all its India assets to Cairn India and getting it listed on the stock exchanges.
4) The tax demand on Cairn India is for the company's alleged failure to deduct withholding tax on capital gains made by Cairn Energy during 2006-2007 as part of a reorganisation ahead of its market listing.
5) Cairn India said it did not agree with the demand and would pursue all possible options to "protect its interest".
6) The tax demands on Cairn Energy and Cairn India were initiated by the previous government, said Finance Minister Arun Jaitley.
7) Speaking in London, Mr Jaitley said, "As far as earlier notices and legacy issues are concerned, they'll have to be sorted out through a due judicial process. We've stuck to that word." He reminded that on Vodafone and Shell issues, the government accepted whatever the courts decided.
8) However, analysts say the latest tax demands go against the new government's promise of establishing a non-adversarial tax regime.
"The common perception is that the government will say it has nothing to do with the case, but the fact is, the way people look at it is everybody is part of the same system," said Mehraboon Irani of Nirmal Bang Securities.
9) Tax expert TP Ostwal told NDTV that tax notices to Cairn Energy and Cairn India were issued in 2007-08, so it's not a case of using retrospective law.
"I don't understand why people are making hue and cry... Looks like newspaper reports are distorted. It seems there is no retrospective angle to the case," he said.
10) Cairn Energy sold its majority stake in Cairn India to Vedanta in 2011. The British company's stake in Cairn India was reduced to about 10 per cent after the transaction.
Cairn India was the top loser in the 50-share Nifty benchmark. The stock ended 3.3 per cent lower at Rs 218.
(With inputs from agencies)
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