Why Share Issuance Cases Lost In The DRP?

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Published on Sat, Mar 01,2014 | 17:45, Updated at Sat, Mar 01 at 17:45Source : CNBC-TV18 | Watch Video :

Like all indirect offshore transfers came to be known as the Vodafone problem, this new tax tangle is better recognized as the Shell problem! Mostly because Shell faces an astronomical 15,000 crore rupee tax demand for having allegedly undervalued shares issued to its parent company. Shell may be the biggest case but it is definitely not the only one. Dozens of such share issuances have been sought to be taxed by the Indian tax department in the past few years. And some of them have already met their fate at the Dispute Resolution Panel or DRP. I don't have confirmed figures, but sources tell me the DRP has already decided on a dozen such cases, including the Essar one – and in all of them the DRP has ruled in favor of the tax department. Eventually, of course this issue will get decided in the Supreme Court – but it's still useful to know on what grounds the DRP ruled in favor of Revenue. To discuss just that, CNBC-Tv18's Menaka Doshi spoke to Dinesh Kanabar, Deputy CEO, KPMG and Beni Chatterji, Senior Counsel in the Bombay High Court and Counsel for the Tax Department in many landmark cases.

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