Royal Dutch Shell wins legal battle in India over tax payments

Royal Dutch Shell has won a billion-pound court battle over the underpricing of its shares.

 

The Indian branch of the oil giant was accused of selling its stock for a lower-than-usual amount to its parent firm, and the country's authorities demanded it pay them tax on the interest they would have earned if the shares had been sold at normal price.

 

But the High Court in Mumbai ruled in favour of Shell's Indian unit, arguing that the stock transfers were not taxable. This resulted in the income tax department order being quashed. 

 

"[The tax department] clearly exceeded its jurisdiction", said Shell's India lawyer Mukesh Butani in a statement. The amount being requested from the company was 180bn rupees (£1.9bn).

 

It is not the first time India's authorities have made a high tax claim on a foreign firm – others targeted in tax disputes include HSBC, IBM and Nokia.

 

It is also not the first time they have lost their court cases – in October, British mobile phone company Vodafone came out on top in a £317m court battle over share underpricing. 

 

"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 wrote in a statmeent this morning.