Transfer Pricing Scrutiny On Intra-Group Share Subscriptions - What Does The Future Hold For Shell?

To what extent can transfer pricing provisions be attracted to cross-border investments in Indian subsidiaries? Can the issuance of shares at a price lower than market price be grounds for a transfer pricing adjustment? This question (amongst other hotly debated Indian tax issues, such as those relating to retrospective Indian tax on indirect transfers) is beginning to assume growing prominence on account of the recent high profile transfer pricing adjustment of over Rs. 150 billion on a Shell group entity in India. Reports state that proceedings have also been initiated against HSBC Securities, Standard Chartered Securities and Vodafone on similar grounds, and that Shell has recently filed a writ petition before the Bombay High Court challenging the jurisdiction of revenue authorities to make this adjustment.