Major Update in International Taxation: Supreme Court Ruling on Tiger Global

Описание: 🚨 Major Update in International Taxation: Supreme Court Ruling on Tiger Global 🚨

A significant judgment has just emerged from the Supreme Court of India regarding Tiger Global International Holdings, sending a clear message to foreign investors about the substance of cross-border transactions.

Here is a breakdown of the key takeaways from this landmark ruling involving the sale of Flipkart shares:

📉 The Context
The case revolved around Mauritius-based entities selling shares of a Singapore company (which derived substantial value from Flipkart India) to a Luxembourg entity. The taxpayer sought an advance ruling for a NIL tax withholding certificate, claiming exemption under the India-Mauritius DTAA based on the "Grandfathering Clause" and a valid Tax Residency Certificate (TRC).

⚖️ The Verdict
While the Delhi High Court had previously ruled in favor of the taxpayer, the Supreme Court has now sided with the Revenue Department, upholding the Authority for Advance Rulings (AAR) decision to reject the application.

Key Principles Established:

✅ Substance Over Form: The Court highlighted a lack of legal and commercial substance in the Mauritius entities, noting that effective management and control appeared to be located in the US rather than Mauritius.

✅ TRC is Not Conclusive: Merely holding a valid Tax Residency Certificate is not enough to claim treaty benefits if the setup is deemed a "prima facie" arrangement for tax avoidance.

✅ GAAR Implications: The judgment reinforces that Impermissible Avoidance Arrangements (under General Anti-Avoidance Rules) can override treaty benefits, even if specific DTAA provisions seem beneficial.

✅ Jurisdictional Boundaries: The Supreme Court criticized the High Court for interfering with the AAR’s jurisdiction, stating that if the AAR finds the transaction is designed for tax avoidance, it has the authority to decline a ruling.

The Bottom Line:
This ruling clarifies that while investors are welcome to generate value in India, "smart" tax avoidance structures involving shell entities and treaty shopping will face strict scrutiny. The focus has shifted decisively toward establishing real commercial substance.

#Taxation #TigerGlobal #InternationalTax #CA #Flipkart