Cairn India drags government on tax bill row; stocks rallies

NEW DELHI: Cairn India Ltd rallied as much as 1.93 per cent in trade on Tuesday, after the subsidiary of Anil Agarwal's Vedanta Resources Plc locked horns with the government over the Rs 20,495 cr tax order slapped against the company in March, 2015.

However, the stock ended in red, down 0.48 per cent at Rs 219.7.

"Cairn India has strongly opposed the tax demand by filing a writ petition against the tax department at the Delhi High Court. The company has relied on past verdicts and questioned the enforceability of proceedings under section 201 of the Income Tax Act.

It has also questioned whether there was income chargeable to tax on the internal group restructuring which came under the scanner of the income tax authorities. The matter is likely to come up for hearing later this week," two individuals familiar with the development told ET NOW. ET NOW was the first to report the development.

Earlier in March, Cairn India "received an order from the income-tax department for alleged failure to deduct withholding tax on alleged capital gains arising during 2006-07 in the hands of Cairn UK Holdings Ltd, its erstwhile parent company, a subsidiary of Cairn Energy Plc.