Monday, December 15, 2014

Shell wins transfer-pricing tax dispute in Bombay HC

What the case is all about: It relates to the issue of 8.7 crore shares by Shell India Markets Pvt Ltd to its overseas parent company Shell Gas BV in March 2009. The shares were issued at RS 10 a share, which the income-tax authorities contested and pegged higher at Rs180 a share. The I-T Department charged Shell India of under-pricing a share transfer within the group by Rs 15,220 crore, and consequently evading taxes.

How the case evolved: Shell India moved the Bombay High Court contesting that the issue of shares was capital transaction and out of the transfer pricing bracket.

The High Court ruled in favour of Shell. The order will have an impact on other multinationals fighting the tax department on similar grounds. The government is not likely to appeal further, in line with its decision to reduce tax litigation. Vodafone case was also decided in favour of tax payer, which had similar facts.

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