Taxman attaches shares of V G Siddhartha, CCD

Coffee Day Enterprises on Saturday approached regulatory authorities to get its shares in the Bengaluru-based IT firm Mindtree released from the custody of the Income Tax department in the next few days.

The income tax department has attached some of the shares held by V G Siddhartha and Coffee Day Enterprises Ltd in Mindtree, a move that may halt them from selling their stake in the IT firm.

The step by the I-T department has been taken to recover a tax demand from the two, Mindtree said in a regulatory filing without disclosing further details.

In a filing to the NSE and BSE, Coffee Day Enterprises said the promoter (V G Siddhartha) and the company have filed required revised returns and should not be restrained from selling the stake.

“Further, there is no tax liability payable by the company and its subsidiaries. The promoter has discharged all tax liabilities along with revised returns. Required action will be taken to have these shares released in the next few days,” the company stated.

The Bengaluru-headquartered company stated that the I-T department has issued a “provisional attachment under section 281B of Income Tax or prohibitory orders Act, 1961 for tax demand likely to be raised by the I-T Department on...shareholders of the company — Coffee Day Enterprises Ltd and V G Siddhartha”.

Mindtree said that a prohibitory order from the Assistant Commissioner of Income Tax, Central Circle, Bengaluru, issued on January 25, restricts the transfer of 24 lakh equity shares of both Siddhartha (52,70,000) and Coffee Day Enterprises (22,20,000) amounting to 4.5%.

The I-T move comes at a time when Siddhartha is in advanced talks with KKR to sell 21% shares.

Siddhartha did not respond to DH's calls and texts, seeking comment.

Siddhartha purchased a 6% stake in Mindtree in 1999 at Rs 41 a share. He again increased his stake in 2011 after buying out founder-chairman Ashok Soota’s stake. Now, Siddhartha, Coffee Day Enterprises Ltd and Coffee Day Trading Ltd hold about 21% stake in Mindtree.

According to legal sources, Siddhartha can sell some of his shares.

“He holds 21% shares and the I-T department can’t restrict the sale of 16.5% shares. But it is to be seen how Siddhartha and CCD will take it forward,” he said.