Cairn sought directions to the tax authorities not to take any coercive steps against it for recovery of the demand.
    
Sources said senior advocate Harish Salve would be appearing for Cairn in the matter. Cairn in its petition sought quashing of the income tax department's demand order saying the proceedings were initiated after a lapse of more than six years from the end of the relevant financial year of 2006-07.

It said the courts have held that such proceedings should be initiated within a reasonable period of four years.
    
The tax notice came after Cairn Energy, the Indian company's former promoter, was slapped with a Rs 10,247 crore tax demand for an alleged Rs 24,500 crore worth of capital gains it made in 2006 while transferring all its India assets to a new company, Cairn India, and getting it listed on the stock exchanges.
    
In a recent regulatory filing, Cairn India had said the demand comprised of Rs 10,248 crore in tax and the remainder Rs 10,247 crore in interest payout.
    
Cairn India had also said that the demand notice was sent to it "for an alleged failure to deduct withholding tax on alleged capital gains arising during 2006-07 in the hands of Cairn UK Holdings Limited (CUHL)", its parent company which is a subsidiary of Cairn Energy Plc.
    
This, it said, was in respect of the transaction of CUHL transferring the shares of Cairn India Holdings Ltd (CIHL) to Cairn India Limited as part of internal group reorganisation in 2006-07 to facilitate the initial public offer (IPO) of Cairn India Ltd.
    
In its plea, Cairn India, now controlled by London-listed Vedanta Resources plc, said it "cannot be penalised by expecting that it ought to have withheld tax".
    
"There was no taxable gains and accordingly, no liability to withhold tax on date of payment. Further, there cannot be any liability to withhold tax on consideration discharged by way of share swap," it said.
    
It also said,"Primary liability to pay tax, if any, is of CUHL and they have initiated arbitration proceedings against Government of India under UK India Bilateral Investment Treaty (BIT)."

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