After two draws and a victory in the first three rounds, Anand celebrated his birthday in style, throwing caution to the winds in the game against Short, a former World Championship challenger.
Englishman McShane yet again survived some anxious moments in the tournament and finally drew with compatriot Michael Adams to remain in joint lead with the Indian legend.
The other two bigwigs Magnus Carlsen of Norway and Vladimir Kramnik of Russia also secured victories at the expense of Hikaru Nakamura of the United States and David Howell of England respectively.
With just three rounds to go in the eight-players round-robin tournament, Anand and McShane have eight points each in the soccer-like scoring system in place here and they lead Kramnik by a point.
Magnus Carlsen is on fourth position with six points while Hikaru Nakamura is sharing the fifth spot with Michael Adams. Howell is on two points, a full point clear of back-ranker Nigel Short.
The game against Short saw fortunes fluctuating a few times. The Grand-prix attack as white against the Sicilian by the English met some original play by Anand and the Indian ace was on top with some finely crafted moves leading to slightly better prospect in the ensuing middle game.
Short erred and was saddled with a passive but tenable position and he continued working for counter play that Anand eventually allowed. Short may have been on top towards the end of the game but earlier mistakes had eaten a lot of time on his clock.
Thinking that it was winning, Short uncorked a combination with a piece sacrifice that boomeranged in no time as Anand had seen the perfect riposte. Short fell on his sword allowing a checkmate to end matters soon after.
Kramnik built up a steady advantage against David Howell who employed the Grunfeld defence with black pieces. The Russian opened up the king side for his rooks to infiltrate and though wasn't easy to make further progress, Kramnik showcased his deep understanding following a liquidation.
In his final execution, Kramnik established his rook on the seventh rank and his bishop started firing too. It was all over pretty soon.
McShane made a quiet opening as Adams gradually assumed the initiative. In the middle-game, Adams established his queen and rook on the seventh rank but Luke had a tactical trick to swap the queens and relieve the pressure.
Further exchanges were made and the game eventually came down to an opposite-coloured bishop endgame and the draw was a just result.
Carlsen opted for the English Opening and faced a sort of Dutch Defence against Hikaru Nakamura, Emerging from the opening with a steady edge, Carlsen parted his Bishop for a knight and it looked as if Nakamura will be safe.
However, as the game unfolded, Carlsen's pressure told on both flanks and through a pretty tactical sequence the Norwegian won a pawn and brought the game to an end with his immaculate technique.
In the open tournament being played simultaneously, Indian IM Sahaj Grover suffered a defeat at the hands of top seeded Boris Avrukh of Israel. The best Indian bet in the fray, former world junior champion Abhijeet Gupta won his game against Rafael Rodriguez Lopez of Spain while Saptarshi Roy Chowdhury played out a draw with lower ranked opponent.
Results round 4: Nigel Short (Eng, 1) lost to Viswanathan Anand (Ind,8); Vladimir Kramnik (Rus, 7) beat David Howell (Eng, 2); Magnus Carlsen (Nor, 6) beat Hikaru Nakamura (USA,5); Luke McShane (Eng, 8) drew with Michael Adams (Eng,5).