The Bombay High Court in India has ruled in favour of energy giant Royal Dutch Shell in the long-running multimillion-dollar tax dispute case.
In February 2013, Shell’s India unit was accused of under-pricing shares transferred to its parent firm by $2.5bn.
The case is associated to alleged undervaluation of shares issued by Shell India Markets Private to Shell Gas.
In its latest ruling, the court stated that the transfers of shares were not taxable under the transfer pricing provisions.
Shell welcomed the court’s decision. A spokesman for the company in India said: "We welcome the high court decision. Shell has always maintained that equity infusion by a foreign parent company into an Indian subsidiary cannot be taxed as income.
"This is a positive outcome which should provide a further boost to the Indian government’s initiatives to improve the country’s investment climate."
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By GlobalDataA person familiar with Shell’s strategy said the company will now make a decision on its investments in India including the expansion of petrol business or development of new gas infrastructure.
The ruling is relief for Shell and other international firms that have been targeted in tax dispute cases in India.
