London: Ahead of Finance Minister Arun Jaitley's UK visit, a British MP has written to him seeking early resolution of the Rs 10,247 crore retrospective tax dispute with Edinburgh-based Cairn Energy plc.
Ian Murray, Member of Parliament for Edinburgh South and Shadow Secretary of State for Scotland, wrote to Jaitley saying Cairn has lost jobs and suffered material financial loss as a direct result of action by the Government of India. "This serious matter is of added consequence given that the Cairn story in India is one that has been of huge benefit to India and the Indian people," he wrote.
In January 2014, Cairn was slapped with a Rs 10,247 crore assessment notice on alleged capital gains made on a 2006 internal reorganisation. However, no tax demand has been raised so far. Stating that Cairn has been a model corporate citizen during its 20 years in India, he said the company was an excellent example of investment success and what can be achieved through India and the UK cooperation.
"I would urge you to take action to resolve this issue as a matter of urgency as later this month, it will be two years since the retrospective tax issue first impacted Cairn and it continues to have a hugely detrimental impact on the business and its UK and international shareholders," he said. A resolution to the issue would "let the international investment community see that India is looking to handle retrospective taxation cases responsibly and as quickly as possible".
He sought a meeting with Jaitley during his London visit later this month to discuss "damaging effect of retrospective taxation". The Income Tax Department says Cairn Energy allegedly made a capital gain of Rs 24,503.50 crore in 2006 while transferring all its India assets to a new company, Cairn India, and getting it listed on the stock exchanges. Cairn says no tax was due on the internal reorganisation.