Cairn Energy of UK is seeking compensation from the Government of India for the loss in value it suffered due to an "unfair and arbitrary" Rs 10,247 crore tax demand raised using a retrospective tax law.Using the UK-India Investment Treaty, the Edinburgh-based firm filed a formal dispute notice against the tax demand raised on an internal business reorganisation seven years ago and sought an arbitration with the government to quickly resolve the dispute that is impinging on its investment plans.
Cairn said the imposition of capital gains tax on transfer of its India assets to a new company, In 2006, was not only contrary to relevant legal standards but unjust because it was an internal transaction and no shares or assets were sold to any third party to make any capital gains.