The respondent, a Mauritius-based company, acquired shares of Flipkart Singapore between October 2011 and April 2015. It later transferred them to a Luxembourg entity. The High Court held that the respondent had economic substance, as it incurred expenses of USD 1,063,709 and had liabilities and shareholders’ equity of USD 1,764,819,299. The mere connection of two board members with the TG Group did not establish it as a puppet entity under the LOB clause of the India–Mauritius DTAA. The Court held that, as no tax rate was prescribed under Art. 13(3B) for gains from shares acquired before 1-4-2017, the grandfathering provision in Art. 13(3A) applied, excluding the transaction from capital gains tax. The Supreme Court stayed the High Court order pending disposal of the Revenue’s SLP. (AY 2018-19)
AAR v. Tiger Global International II Holdings (2025) 303 Taxman 252 (SC) Editorial: Tiger Global International II Holdings v. AAR (2024) 165 taxmann.com 405 / 468 ITR 405 / 341 CTR 713 (Delhi)(HC) – operation of the order stayed.
S. 245R: Advance rulings – Non-resident – Entitlement to benefits under DTAA – Transfer of shares – Capital gains – Transfer of shares in a foreign company by one non-resident to another – Treaty shopping – Lifting the corporate veil – Department must establish treaty abuse – Share transaction grandfathered under Article 13(3A) – Order of AAR holding transaction as tax avoidance arbitrary and illegal – Assessee entitled to DTAA benefit – SLP filed by Revenue – Operation of order stayed – DTAA – India–Mauritius [S. 45, 90, 119, 245R(2), Arts. 13(3), 13(3A), 27A]