Shell terms I-T dept.’s tax evasion claims as “absurd”

Shell terms I-T dept.’s tax evasion claims as “absurd” Shell India, the Indian arm of global petrochemical and energy giant Shell, has termed income tax (I-T) department's tax evasion claims as "absurd," claiming that it did not evade taxes.

Indian income tax authorities sent a notice to Shell India alleging that the petrochemical and energy giant evaded tax by undervaluing shares issued to its parent firm, Shell Gas BV, for equity infusion of around Rs 87 crore in 2009.

As per the tax department, the value of 8.7 crore shares that Shell India had issued to its parent firm at Rs 10 per piece four years back should have been higher by Rs 15,220 crore, the amount on which the company was liable to pay income tax.

Yasmine Hilton, chairman of Shell India, challenged the income tax officials' claims saying, "Shell does not evade taxes. I cannot have our reputation tarnished that way. We will consult various parties in the matter."

Hilton also said that the income tax department's move was bad in law because the transaction was a capital receipt, on which income tax could not be levied.

In its 2011-12 audit report, India's revenue department has estimated income suppression of around Rs 44,532 crore pertaining to transfer pricing. The estimated figure is up 85 per cent over the comparable figure estimated in the previous year's audit report. The authorities have asked the companies to pay around a third of the amount as `transfer pricing adjustment' tax.

Shell's tax experts are in talks with the income tax authorities to settle the issue.

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