Court rules in favour of Shell in $3bn India tax battle Royal Dutch Shell has won a significant victory in its long-running $3bn battle with India's revenue authorities, in a judgment with implications for dozens of tax disputes involving multinational companies in Asia's third-largest economy. On Tuesday, the Bombay high court ruled in favour of the Anglo-Dutch energy group over allegations that it had underpriced shares issued by Shell's Indian subsidiary to its parent - a charge the company had attacked as "baseless." Shell's case provides a rare tax victory for a multinational operating in India, and follows a string of high profile battles between revenue authorities and global businesses that have dented the country's reputation as a destination for foreign investment. The decision also follows a similar ruling in favour of Vodafone last month, when the British telecoms group won a case relating to what is known as transfer pricing, or the valuation of financial transfers between different parts of international companies. Shell's case, which also related to transfer pricing, is likely to affect more than two dozen other international businesses hit by similar tax claims including HSBC and AT&T, according to Dinesh Kanabar, chief executive of Mumbai-based Dhruva Tax Advisors. This is an important ruling and very good news. It is likely to help many other companies, as well as boost India's reputation abroad," he said. Shell's case involved two years worth of tax claims in 2008 and 2009, in which India's authorities alleged the group had incorrectly assessed the amount it owed relating to certain share transfers. The authorities said Shell owed Rs180bn ($3bn) in tax on these stock transactions. In a statement, Shell welcomed the Bombay high court's decision, calling it a "positive outcome which should provide a further boost to the Indian government's initiatives to improve the country's investment climate." Businesses operating in India have long complained that its tax authorities levy claims in a manner that is often unpredictable and unfair, partly because they are forced to meet strict revenue collection targets set by the government. India's prime minister Narendra Modi has pledged to end what his centre-right Bharatiya Janata party once described as a system of "tax terrorism," as his government tries to encourage more foreign businesses to invest in the country. "From an investor point of view, the Shell decision is extremely important," said Arun Anandagiri, co-founder of tax information service Taxsutra.com. It shows the court says that the tax authorities cannot just go on a fishing expedition. Despite Shell's victory, numerous other tax disputes remain unresolved in India, including a second case involving Vodafone about a $2.6bn claim relating to its takeover of an Indian mobile phone business. Tax experts will watch carefully to see if Mr Modi's government decides against launching an appeal in India's supreme court - a move that would be widely welcomed by business groups. "Under the earlier regime everything was carried up to the supreme court, but this government may now say "let's just put an end to this whole matter," which would be welcome," Mr Kanabar said. The legal victory also has wider implications for Shell's operations in India. Shell has been awaiting the outcome of its tax case before deciding whether to make further investments in India, including enlarging its petrol business or developing new gas infrastructure, according to one person familiar with the group's strategy.