The latest decision that has been passed by the apex court has stayed the Double Tax Avoidance Agreement ( DTAA ) benefits granted by the Delhi High Court, which has caused a setback to Tiger Global in the Flipkart deal.
The delay was condoned by the bench for the filing of the Special Leave Petition. The bench heard Mr. N. Venkatraman, the A.S.G., appearing for the revenue and Mr. Harish Salve, the senior counsel, appearing for the respondent-assessee.
The Supreme Court, comprising Justice J.B. Pardiwala and Justice R. Mahadevan, stayed the impugned order and judgement passed by the Delhi High Court for the time being, noting that the issues that were raised in the Special Leave Petition required thorough consideration by the bench.
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By going through the facts of the case, Tiger Global International III Holdings is a private company limited by shares incorporated in Mauritius, and its principal office is also in Mauritius.
It is pertinent to note that the respondent had between October 2011 and April 2015 purchased 2,36,70,710 shares of Flipkart Singapore. It was claimed that its ownership stake in Flipkart Singapore had been acquired during the above-mentioned period and hence without a doubt before 01-04-2017, the determinative date which finds reference in Article 13(3A) of the India-Mauritius DTAA.
On 18-08-2018, the respondent had changed their stake in Flipkart Singapore to Fit SARL, a Luxembourg corporation. The total number of shares in this transaction was 1,47,54,087, with a total value of about Rs. 131,22,02,50,194.
Earlier, the AAR reached the conclusion that the above transaction was for tax avoidance. The Delhi High Court, in its judgement, held that the grandfathering clause in Article 13(3A) would exclude the transaction carried by the petitioners from the scope of capital gains tax.
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The Supreme Court has thus stayed the order of the Delhi High Court, which favoured Tiger Global International. In its judgement, the Delhi High Court had held that the transactions entered into by the assessee were not aimed at tax avoidance.
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