I-T claims absurd, we donít evade tax: Shell India
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Global petrochemical and energy major Shell's Indian arm has challenged the Income Tax Department's recent order alleging tax evasion by way of undervaluation of shares issued to the company's parent, Shell Gas BV, for equity infusion of Rs 87 crore four years ago.
Yasmine Hilton, chairman, Shell India on Tuesday termed the tax demand "absurd". "Shell does not evade taxes. I cannot have our reputation tarnished that way. We will consult various parties in the matter," Hilton told reporters.
According to the tax department, the value of 8.7 crore shares issued by Shell India to Shell Gas BV at Rs 10 a piece in 2009 should have been higher by Rs 15,220 crore (Rs 183 a share) on which income tax was liable to be paid. Shell said the tax department's move is bad in law as the transaction was a capital receipt on which income tax cannot be levied.
The Revenue Department in its 2011-12 audit has claimed income suppression of Rs 44,532 crore ($8 billion) pertaining to transfer pricing, up 85 per cent over the comparable figure in the previous year's audit. Companies have been asked to pay nearly a third of this amount called 'transfer pricing adjustment' as tax. Shell's tax experts are in discussions with the authorities over the past week.
"To service the downstream business, we needed an equity injection in 2008 of $160 million. We have now received a tax request of $1 billion on this equity injection of $160 million. Somebody needs to explain this because I do not understand," Hilton said. FE