BOMBAY: Shell has won a long running court battle against Indian authorities over a tax dispute involving billions of dollars.
The Bombay High Court ruled in favour of Shell’s Indian unit, which was accused of under-pricing shares transferred to its parent firm by $2.5 billion in February 2013.
Officials wanted tax on the interest that the firm would have earned.
But the Indian court ruled that the stock transfers were not taxable.[The tax department] “Clearly exceeded its jurisdiction”, said Shell’s lawyer Mukesh Butani in a statement, referring to the country’s share transfer provisions, which exempt taxation.
The ruling is a significant victory for Shell and other international companies operating in Asia’s third largest economy that have been targeted in tax disputes.
A series of high-profile tax claims on big international firms recently including IBM, Nokia, HSBC and AT&T has put negative attention on India’s tax authorities and dented the country’s reputation as a destination for foreign investment.
“This is a positive outcome which should provide a further boost to the Indian government’s initiatives to improve the country’s investment climate,” Shell’s Indian unit said.