In a closely watched ruling with big implications for cross-border investments, the Supreme Court on Thursday settled the long-running tax dispute between the Income Tax Department and Tiger Global’s Mauritius entities over gains from the Flipkart–Walmart transaction.
The case tested how far Indian tax authorities can go in questioning treaty benefits claimed under the India–Mauritius Double Taxation Avoidance Agreement (DTAA), especially when investments are routed through overseas holding structures.
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Background of the Case
Tiger Global International II, III and IV Holdings - all incorporated in Mauritius - had invested in Flipkart’s Singapore holding company years before Walmart acquired the group in 2018. When Tiger Global sold its stake as part of that global deal, the transaction generated capital gains running into thousands of crores.
The companies claimed exemption from Indian capital gains tax under the India–Mauritius tax treaty. But tax authorities disagreed.
The Authority for Advance Rulings (AAR) rejected Tiger Global’s request for clarity, holding that the structure was prima facie designed to avoid tax. It said the real control of the companies lay outside Mauritius and that treaty benefits should not apply.
Tiger Global moved the Delhi High Court, which overturned the AAR’s view in 2024. The Revenue then took the fight to the Supreme Court.
What the Court Examined
A Bench led by Justice R. Mahadevan had to decide three core issues:
- Whether the Mauritius entities were genuine tax residents entitled to treaty protection.
- Whether the transaction was a tax-avoidance arrangement disguised through corporate layers.
- Whether capital gains from selling shares of a Singapore company - whose value came mainly from Indian assets - could still enjoy treaty relief.
The Revenue argued that the deal amounted to an “indirect transfer” taxable in India and that tax residency certificates (TRCs) should not be treated as final proof when the real decision-making lay elsewhere.
Tiger Global countered that it complied with Mauritian law, held valid TRCs, and that treaty benefits could not be denied merely because India found the structure inconvenient.
Court’s Observations
The Bench took a firm view on the limits of tax authorities in going behind treaty documents.
“The issuance of a tax residency certificate by the competent authority of a contracting state carries a strong presumption of legitimacy,” the court observed, adding that such certificates cannot be brushed aside on the basis of suspicion alone.
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The judges noted that global investment funds often operate through pooling vehicles and layered structures. That, by itself, does not make them sham entities.
On the allegation of tax avoidance, the court said that treaty shopping is not illegal unless it crosses the line into fraud or artificiality. There must be clear proof that an arrangement exists only to dodge tax and has no real commercial purpose.
The court also accepted the High Court’s view that gains from shares acquired before April 1, 2017 were “grandfathered” under the amended India–Mauritius DTAA. This meant India had consciously agreed not to tax such transactions, even if they involved indirect transfers.
The Decision
Dismissing the Revenue’s appeals, the Supreme Court upheld the Delhi High Court judgment and ruled in favour of Tiger Global.
It held that:
- The Mauritius entities were entitled to treaty benefits.
- The transaction was not designed for tax avoidance.
- Capital gains from the Flipkart stake sale were not taxable in India under the applicable DTAA provisions.
With this, the court put an end to a dispute that had lingered since the Walmart takeover of Flipkart and clarified the legal position on treaty protection for long-standing foreign investments.
Case Title: Authority for Advance Rulings vs Tiger Global International Holdings
Case No.: Civil Appeal Nos. 262–264 of 2026
Case Type: Income Tax / International Taxation
Decision Date: 15 January 2026
