No Relief to Tiger Global in Flipkart Share Sale Case: Supreme Court Explains Why the Deal Was Taxable in India

On 15 January 2026, the Supreme Court of India delivered a significant ruling in the long-running tax dispute relating to Tiger Global’s exit from Flipkart. The Court held that the transaction through which Tiger Global entities sold their shares in Flipkart Singapore was designed primarily to avoid Indian tax and therefore did not qualify for treaty protection under the India–Mauritius Double Taxation Avoidance Agreement (DTAA).

By overturning the Delhi High Court’s 2024 judgement and restoring the findings of the Authority for Advance Rulings (AAR), the Supreme Court reaffirmed India’s firm stance against treaty abuse, conduit structures, and impermissible tax avoidance arrangements.

Background of the Dispute

The case arose from Tiger Global’s partial exit from Flipkart in 2018, when Walmart Inc. acquired a controlling stake in the e-commerce giant.

The assessees in the case were Tiger Global International II Holdings, III Holdings and IV Holdings, all incorporated in Mauritius. These entities had invested in Flipkart Private Limited, Singapore, which in turn held investments in Indian operating companies. Importantly, the value of Flipkart Singapore’s shares was derived substantially from assets located in India.

When the Tiger Global entities sold their Flipkart Singapore shares to a Luxembourg-based entity as part of the Walmart acquisition, they received consideration exceeding USD 2 billion.

The central question was whether the capital gains arising from this sale were taxable in India, or whether they were exempt under the India–Mauritius DTAA.

Why Mauritius Became the Focus

For many years, foreign investors routed investments into India through Mauritius because the DTAA allowed capital gains taxation only in the country of residence. This route was widely used until concerns arose about treaty shopping and tax avoidance.

Although the respondents held valid Tax Residency Certificates (TRCs) from Mauritius and claimed operational presence there, the Revenue argued that these entities were merely conduit companies, created solely to take advantage of treaty benefits while actual control and decision-making rested outside Mauritius.

What Triggered the Legal Proceedings

Before completing the transaction, the Tiger Global entities sought nil withholding tax certificates under Section 197 of the Income Tax Act. The tax authorities rejected this request, stating that treaty benefits were not available.

The assessees then approached the Authority for Advance Rulings (AAR) seeking clarity on taxability. In March 2020, the AAR refused to even entertain the applications, holding that the transaction appeared to be designed for tax avoidance, which barred its jurisdiction under Section 245R(2).

The Delhi High Court later set aside the AAR’s order in August 2024, holding that the transaction was bona fide and protected under the DTAA. This judgement was then challenged by the Revenue before the Supreme Court.

Key Issues Before the Supreme Court

The Supreme Court examined three principal questions:

1. Whether capital gains from the sale of Flipkart Singapore shares were taxable in India under Section 9(1)(i) of the Income Tax Act.
2. Whether possession of Tax Residency Certificates alone entitled the assessees to DTAA benefits.
3. Whether the transaction amounted to an impermissible tax avoidance arrangement under Indian law and GAAR.

Supreme Court’s Approach to Tax Sovereignty

At the outset, the Court emphasised that taxation is a core sovereign function, stating that the power to levy and collect tax must be exercised strictly in accordance with law, as mandated by Article 265 of the Constitution.

While acknowledging that DTAAs are intended to prevent double taxation and promote cross-border investment, the Court made it clear that treaties cannot be misused to achieve double non-taxation through artificial structures.

Examination of the Transaction Structure

The Court undertook a detailed factual analysis and agreed with the AAR’s findings that:

• The Mauritian entities were part of a multi-layered structure controlled ultimately by Tiger Global Management LLC, USA.
• Key financial and operational decisions were taken outside Mauritius.
• The same individual exercised authority across multiple levels of the investment structure.
• The Mauritian entities had no real commercial activity apart from holding Flipkart investments.

Although the assessees claimed that their Boards in Mauritius exercised independent control, the Court found that these Boards merely ratified decisions already taken elsewhere.

The Court observed that all three assessees had invested in only one asset—Flipkart Singapore—and that the entire structure existed solely to route investments through treaty-favoured jurisdictions.

Why the “Simple Share Sale” Argument Failed

The assessees argued that the transaction was merely a straightforward sale of shares between unrelated parties. The Supreme Court rejected this view.

On facts, the Court held that the sale was part of a pre-arranged, composite transaction, carefully structured to avoid taxation in both India and Mauritius. The Court stressed that tax authorities are entitled to examine the entire lifecycle of the transaction, including acquisition and exit, rather than isolating the sale event alone.

Interpretation of Article 13 of the DTAA

A key aspect of the judgement was the interpretation of Article 13 of the India–Mauritius DTAA, dealing with capital gains.

The Court clarified that treaty benefits are available only if the assessee is liable to tax in the country of residence. Mere possession of a TRC does not automatically confer immunity from Indian taxation.

Since the assessees failed to demonstrate that the capital gains were actually taxable in Mauritius, they could not invoke treaty protection. The Court also noted that the 2016 Protocol amending the DTAA clearly reflected the intention of both countries to curb abuse of the Mauritius route.

Application of GAAR

The Supreme Court applied Chapter X-A of the Income Tax Act (GAAR) and held that the statutory presumption of tax avoidance squarely applied in this case.

Under Section 96(2), the burden lies on the taxpayer to disprove tax avoidance. The Court found that the assessees failed to establish any genuine commercial substance independent of tax benefits.

The arrangement, according to the Court, was created with the sole intent of evading tax, making it an impermissible avoidance arrangement under Indian law.

Why the AAR Was Right to Reject the Application

The Court upheld the AAR’s decision to reject the application at the threshold stage, holding that once a transaction is found to be prima facie designed for tax avoidance, the AAR is barred from ruling on merits under Section 245R(2).

This reaffirmed that advance ruling mechanisms cannot be used to legitimise abusive tax structures.

Final Decision of the Supreme Court

Allowing all the appeals filed by the Revenue, the Supreme Court held that:

• The Tiger Global entities were conduit companies lacking commercial substance.
• The investment structure was created primarily to obtain treaty benefits.
• The transaction constituted an impermissible tax avoidance arrangement.
• GAAR was clearly applicable.
• Capital gains arising from the transfer of Flipkart Singapore shares after 1 April 2017 were taxable in India.

Accordingly, the Court set aside the Delhi High Court’s judgement and restored the findings of the AAR.