LONDON (Alliance News) - Vedanta Resources PLC on Friday said it has served a notice of claim under the UK-India bilaterial investment treaty to protect its legal position and shareholder interest in light of the retrospective tax demand handed down in India to its subsidiary Cairn India Ltd.
The tax demand made by the Indian authorities related to alleged failure to deduct withholding tax on alleged capital gains arising in 2006 and 2007 while Cairn India was owned by Cairn Energy PLC.
The amount demanded from Cairn India totals around USD3.29 billion, Vedanta said, half in tax and half in interest.
If enforced, Vedanta said the demand would have significant consquences for Cairn India and Vedanta's investment in the company. It added a parallel tax demand has been made by Indian tax authorities on Cairn UK Holdings Ltd.
Under the bilateral investment treaties that India has with many countries, foreign investors are covered by various protections. There are also clauses within the treaties covering dispute resolution.
Shares in Vedanta were up 0.1% to 540.5 pence on Friday, while Cairn Energy shares were down 0.65 to 162.00 pence.
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