Cairn Energy Plc has been barred from selling its remaining 10.3 per cent stake in Cairn India, the British oil giant has confirmed.

Edinburgh-based Cairn Energy has said in a statement that the Income Tax (I-T) Department of India has launched a probe into transfer of its India assets, and instructed it to hold its shares in Indian company.

The oil giant said in the statement, "Cairn is cooperating to provide the necessary documentation and information as requested. While discussions are ongoing, the Income Tax Department has instructed Cairn Energy plc to hold its shares in Cairn India."

The company, which had earlier announced its plans to offload its remaining stake in Cairn India as it embarks on a $400 million exploration drive in 2014, also claimed that it was in full compliance with all income tax laws and assessments of the country.

Indian tax authorities are probing if capital gains tax was due from Cairn Energy Plc's transfer of shares of Indian assets that were held in a subsidiary established the tax haven of Jersey to Cairn India in 2006.

Separately, Cairn India, a subsidiary of Vedanta Resources, reported a decline of 13.8 per cent in net profit in the three months ended December 31, 2013. Profit after tax (PAT) slipped from Rs 33.44 billion in the December quarter of 2012 to Rs 28.84 billion in the December quarter of 2013. Earnings before interest, tax, depreciation & amortisation (EBITDA), however, grew slightly to Rs 35.92 billion.