IT dept loses Rs 18,000 cr transfer pricing case against Shell

MUMBAI: The Bombay High Court has disallowed the income tax department’s demand for more than Rs 18,000 crore from the Indian unit of oil and gas company Royal Dutch Shell for what it alleged underpricing of shares issued to the Anglo-Dutch parent.

The order comes just a month after the same court scrapped a similar tax notice slapped on the local subsidiary of UK telecom major Vodafone Group. These and other demands by the Indian tax authorities to foreign companies over transfer pricing – pricing of cross-border transactions between related entities - have been seen by overseas investors as high-handed. The companies claim that they have followed the rules prevailed at the time of effecting the transactions, while also complaining about India’s uncertain tax policies that they say are making life difficult here.

On Tuesday, a division bench rejected the claim of the tax department, which had demanded Shell India Markets to pay Rs 15,000 crore for 2007-08 and Rs 3,100 for 2008-09.