ITAT upholds Taxability of Capital Gains on Sale of Flipkart Shares by Ex-Flipkart COO, Denies DTAA Relief Under India-Singapore Tax Treaty [Read Order]

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) dealt with the issue of taxability of capital gains arising from the sale of shares of Flipkart Private Limited held by Binny Bansal in an appeal relating to the assessment year 2020-21.

The assessee, Binny Bansal, appealed against a final assessment order passed by the DCIT, Bangalore under Section 143(3) read with Section 144C(13) of the Income Tax Act, 1961. In the order, the Assessing Officer brought to tax long-term capital gains arising from the sale of 5,39,912 shares of Flipkart, a Singapore-incorporated company.

The assessee claimed that the capital gains were not taxable in India, contending that the gains were exempt under Article 13(5) of the India-Singapore Double Taxation Avoidance Agreement. It was also argued that the gains were not chargeable to tax under the Income Tax Act as per Explanation 7(a) to Section 9(1)(i). The reasoning supplied was that the shareholding did not cross the prescribed thresholds of ownership, voting power or control.

It was further contended that tax had been deducted at source by the buyers without considering treaty protection and statutory exemptions, which resulted in excess deduction of tax and a consequential refund claim.

The Assessing Officer rejected the submissions, holding that once the assessee was treated as a resident of India, the capital gains were fully taxable under domestic law. Relief on the basis of treaty was also denied as the assessee did not qualify to be a resident of Singapore under Article 4.

While the Dispute Resolution Panel granted limited relief by directing recomputation of capital gains under Rule 115 of the Income Tax Rules and allowing deduction of the expenses incurred in transfer of shares, the core finding on taxability was upheld. The Tribunal affirmed this view and sustained the taxation of capital gains in India.

Consequently, the appeal filed by the assessee was partly allowed.

The order was pronounced on January 9, 2026, by a bench comprising Prashant Maharishi (Vice President) and Keshav Dubey (Judicial Member).

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