Supreme Court stays Delhi HC order exempting Tiger Global from capital gains tax in Flipkart-Walmart deal
Supreme Court on Friday stayed a Delhi High Court order that exempted Mauritius-based private equity firm Tiger Global International III Holdings and its related entities from capital gains tax in the Flipkart stake sale to U.S. retailer Walmart in 2018.
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A Bench led by Justice J.B. Pardiwala also issued a notice to Tiger Global on a petition by Authority for Advanced Ruling (Income Tax) (AAR) against the HC order. The HC had overturned a 2020 decision by AAR, which had denied the India-Mauritius Double Tax Avoidance Agreement (DTAA) to Tiger Global on the grounds that the transaction was prima facie designed to avoid tax. The AAR had in March 2020 also said that the India-Mauritius treaty did not intend to exempt capital gains from the transfer of shares in non-Indian companies.
The case will be next heard by the SC on February 18.
Tiger Global and its Mauritius entities had claimed that gains from the transfer of stake would be exempt from taxation as Article 13(3A) of the treaty «grandfathered» all acquisition of shares before April 1, 2017.
The grandfathering provision under the DTAA allowed these investors to avoid capital gains tax on the sale of shares acquired prior to that date.
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