The Delhi High Court has begun hearing the Rs 20,000 crore tax battle between Cairn India and the tax department. The taxman is alleging that Cairn India did not pay capital gains tax when shares changed hands in the financial year 2007.
The Delhi High Court has begun hearing the Rs 20,000 crore tax battle between Cairn India and the tax department. The taxman is alleging that Cairn India did not pay capital gains tax when shares changed hands in the financial year 2007. Cairn is refuting these charges. Ashmit Kumar reports
The entire issue pertains to the transaction whereby CUHL that is Cairns UK Holdings Company had transferred its Indian assets to Cairn India which the tax department is seeking to target. It is claiming that this transaction results in capital gains of Rs 24,000 crore in the hands of Cairn UK. Cairn India, represented by Harish Salve argues that the Indian government is trying to invoke the retrospective taxation that was provided for in 2012. He went on to argue that there is no question of capital gains arising out of this transaction or an unreasonable delay. They were served with a notice in 2014, so there is a reasonable delay. Salve also went on to argue that this is a case of oppressive use of force.
In response, the government said that as per their assessment, CUHL has already made capital gains of Rs 24,000 crore. They have been served with a notice and they have admitted to these capital gains. Government also went on to argue that the High Court is not the appropriate forum that if one has to challenge the tax demand it has to be challenged before the Dispute Resolution Panel (DRP) and not directly before the High Court. So it is not the appropriate forum.
Also it is important to add here that the government by way of a January 2014 order has already frozen shares to the extent of Rs 4,200 crore of Cairn India. So the government is right now seeking some kind of payment back in India at least as a kind of initial payment and that is subject matter of further debate. We will find further discussion and argument between the two heavyweights on April 22, that is when the case gets taken up again.
Cairn India stock price
On April 16, 2015, Cairn India closed at Rs 236.10, up Rs 8.20, or 3.60 percent. The 52-week high of the share was Rs 385.00 and the 52-week low was Rs 209.30.
The company's trailing 12-month (TTM) EPS was at Rs 21.98 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 10.74. The latest book value of the company is Rs 206.66 per share. At current value, the price-to-book value of the company is 1.14.
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