March 9, 2021
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To: either/view subscribers

Good afternoon. There has been a 1400% increase in the number of new women investors in the Indian crypto market over the past year. Apart from Bitcoin, women preferred to invest in Ethereum, Tether, Ripple and Cardano.

Feature Story 📰

Cairn Energy v/s Indian Government

On Sunday, Cairn Energy PLC’s CEO Simon Thomson asked the Indian government to honour its obligations by paying $1.4 billion (including interest) to the company in damages arising out of retrospective taxation. The amount was ordered payable by the Permanent Court of Arbitration based out of The Hague, The Netherlands. The order was pronounced on 21 December 2020. Let us dig into the details.


The Indian government had enacted a retrospective tax legislation in 2012, after the Supreme Court of India dismissed the government’s order levying capital gains tax in 2007 on the sale of Hutchison’s India business to Vodafone for $11.2 billion (read either/view’s article on this case here).

In 2014, the government figured that Cairn should also be paying capital gains tax after the company reorganized its business prior to filing an IPO in 2006. The government claimed that Cairn was liable to pay ₹10,247 crores as taxes. While the government did not take any enforcement action in the Vodafone case, it proceeded to withhold tax refunds for Cairn, sold off Cairn’s stake in its India unit and confiscated the dividends from the holding unit.

Cairn had approached the Permanent Court of Arbitration in 2016 appealing against India’s actions and seeking damages from the Indian government. After the tribunal released its order, Cairn moved courts in 9 countries to enforce the $1.4 billion arbitral award. Five countries, including US and UK, have approved the award. If the Indian government does not pay up soon, then Cairn can seize Indian assets in those countries.

Indian government’s claims:

  • Cairn deliberately attempted to structure its corporate reorganization in 2006 to avoid paying taxes in India. If the purpose of the reorganization was to avoid taxes, then India had the right to file cases against the company under the anti-avoidance rule.
  • The 2006 transactions were taxable under Section 2(47)(vi) of the Income Tax Act, 1995. The clause in the Act states that ‘transfer’ includes “any transaction (whether by way of becoming a member of, or acquiring shares in, a co- operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property.” Cairn resorted to indirect transfer of immovable property (oilfields situated in India); hence it is taxable.
  • The government argued that the 2012 amendment of the Income Tax Act was merely a “clarification of the Parliamentary intent regarding indirect transfers of Indian assets.” It noted that since it was just a clarification, the amendment cannot be viewed as a retrospective amendment.
  • Even if the 2012 amendment is considered to be retrospective, it does not breach the FET (Fair and Equitable Treatment) standard (FET standard is usually mentioned in bilateral investment treaties (BIT), but the FET phrase is vague and gives rise to varying interpretations of ‘fairness’ and ‘equity’ by the arbitrators).
  • The government also argued that it did not breach the India-UK Bilateral Investment Treaty, as tax disputes are outside the scope of BIT, and hence not arbitrable. The BIT offers protection only for “investments” and not for “returns”. The transactions of Cairn in 2006 cannot be called as ‘investments’ as defined in the BIT.

Tribunal’s judgment:

  • There is no rational basis in the Income Tax Deparment’s decision to levy capital gains tax. The assessment of tax was done based exclusively on the 2012 amendment.
  • The history of the Income Tax Act legislation in India suggests that the 2012 amendment substantially altered the scope of Section 9(1)(i) of the ITA, and it was not merely a clarification.
  • The burden of proving that Cairn avoided taxes in India lay with the Indian government. However, the Indian side could not provide satisfactory evidence which would prove that Cairn indulged in tax avoidance practices.
  • Section 269UA(d) of the Income Tax Act defines ‘immovable property’ as “any land or any building or part of a building, and includes, where any land or any building or part of a building is to be transferred together with any machinery, plant, furniture, fittings or other things, such machinery, plant, furniture, fittings or other things also.” The tribunal noted that this section does not “refer to contractual rights to operate oil wells, or to obtain payment from operating oil wells.” Hence, the ‘immovable property’ defence does not have any merit.
  • The tribunal ruled that the 2012 amendment violated the principle of legal certainty and the retrospective taxation on Cairn was “grossly unfair”.

Beyond Echo Chambers 🕵️

For the Right:

For the Left:

  • Congress is becoming the very thing that it accused other political parties of – ‘a vote-cutter’.

Election Watch 🗳️


(126 constituencies – 3-phase polls)

  • Three regional parties from Bihar are going to try their luck in the upcoming Assam elections. Bihar Chief Minister Nitish Kumar’s Janata Dal (United), former Minister Upendra Kushwaha’s Rashtriya Lok Samta Party and Bihar’s main opposition party Rashtriya Janata Dal have put their hats into the ring.
  • BJP will not be naming their Chief Minister candidate before the Assam polls. It seems that the party’s Parliamentary board will take a call during the time of government formation, and not before that.


(140 constituencies – 1-phase poll)

  • Actor Devan has merged his political party, the Kerala People’s Party (KPP), with the BJP’s state unit. According to him, he took this decision after taking advice from several sources, including Muslim and Christian communities. It is to be noted that Devan had previously contested in two Assembly elections but had lost both.

Tamil Nadu

(234 constituencies – 1-phase poll)

  • Political parties in Tamil Nadu are trying to outdo each other through their poll promises. After DMK promised ₹1,000 a month for homemakers, AIADMK upped the offer and promised to pay ₹1,500 a month if it comes to power in the upcoming elections. The AIADMK also promised 6 free LPG cylinders per year to each family in the state.
  • TTV Dinakaran’s Amma Makkal Munnetra Kazhagam (AMMK) has allied with Asaduddin Owaisi’s All India Majlis-e-Ittehad-ul-Muslimeen (AIMIM) for the upcoming elections. AIMIM has been allotted three seats in Tamil Nadu by the AMMK. TTV Dinakaran is the nephew of VK Sasikala (former aide of late J. Jayalalithaa).

West Bengal

(294 constituencies – 8-phase polls)

  • The exodus of Trinamool Congress (TMC) members to the BJP continues unabated in West Bengal. Five sitting MLAs of the TMC – Sonali Guha, Dipendu Biswas, Rabindranath Bhattacharya, Jatu Lahiri and Sital Sardar – have jumped ship and joined the BJP after being denied tickets to contest the upcoming polls.

State of the States 🏴

  • Punjab – The last budget of the current government led by Capt. Amarinder Singh was tabled yesterday. Several announcements were made during the budget presentation by state Finance Minister Manpreet Singh Badal, including waiver of loans worth ₹1,186 crore of 1.13 lakh farmers and ₹526 crore of landless farmers.
  • Himachal Pradesh – In his budget speech last week, Chief Minister Jai Ram Thakur announced that his government is formulating a policy to allow controlled cultivation of the cannabis or hemp plant in the state. The plant will be cultivated commercially for non-recreational use cases like medicine preparation or fabric development.
  • Rajasthan – The state’s Skill, Employment and Entrepreneurship Minister Ashok Chandna informed the Assembly that around 2.5 lakh youth benefited from unemployment allowance so far. Unemployed male candidates are given ₹5,000 per month while female, transgender and special qualified candidates are given ₹3,500 per month on first-come-first-serve basis. The maximum number of beneficiaries under the scheme is capped at 2 lakhs.

Key Number 🔢

10,113 – Number of Indian companies that shut down its operations and were struck off under Section 248(2) of the Companies Act, 2013. The data is for the period between April 2020 to February 2021. All these companies had shut down voluntarily, and not due to any penal action.