Capricon Energy gets tax refund in retro tax case

“Capricorn is pleased to confirm that an expected Indian tax refund of Rs 79 billion has been paid and net income of $1.06 billion has been achieved,” the company said in a statement.

The British energy major also said a circular is expected to be issued in early March, detailing necessary shareholder proposals regarding the company’s proposed shareholder return of up to US$700 million. This includes a $500 million tender offer and a $200 million share buyback program, the company said.

Tax refunds are done under the Taxation of India (Amendment Act) 2021, which sought to end all disputes arising out of retrospective amendments to the Income Tax Act made in 2012. Tax refund is basically done after cancellation of tax assessment levied against the company. January 2016 under the 2012 amendment.

The settlement of the tax dispute meant Capricorn relinquishes its rights of the 2020 arbitral tribunal in its favor and asks India to pay $1232.8 million plus interest and $22.38 million in arbitration and legal costs.

Experts termed the disposal of the case positive within six months of bringing in a legal framework to deal with these cases. Amit Maheshwari, tax partner, AKM Global, a tax and consulting firm, said, “Given the Covid pandemic, the complexities involved and the need for approvals, settling the dispute in about six months is a positive development.”

This is one of the 17 long-standing disputes over taxation on offshore sale of Indian properties that the government is trying to settle. The settlement scheme seeks to repeal tax demands raised or confirmed before 28 May 2012, by invoking an anti-abuse provision of the Income Tax Act introduced during the previous United Progressive Alliance (UPA) government in 2012. There is a consensus between the government and the opposition leaders on the need to settle these matters.