Overview
- Setting aside an August 2024 Delhi High Court ruling, the bench of Justices J B Pardiwala and R Mahadevan reinstated the AAR’s 2020 threshold rejection after finding the arrangement prima facie tax-avoidant.
- The court held that capital gains from the 2018 Flipkart stake sale are taxable in India and that Tiger Global cannot claim Article 13(4) protection under the India–Mauritius DTAA.
- The ruling underscores that tax residency certificates are only eligibility documents and do not confer treaty benefits where transactions are impermissible under GAAR.
- Tax authorities argued Tiger Global’s Mauritius entities were conduit vehicles for the U.S. parent in the Walmart takeover exit, and the court agreed treaty relief was unavailable.
- Legal advisers say the decision will prompt foreign funds to reassess offshore structures and treaty reliance, with Tiger Global still able to seek review though such petitions rarely succeed.