Abstract

This case comment is situated within the domain of taxation law and examines the intricate issues of international taxation and treaty shopping in the Tiger Global-Flipkart case, focusing on India's Double Taxation Avoidance Agreement (DTAA) with Mauritius. To address double taxation, India has established DTAAs, such as the 1983 India-Mauritius DTAA, which exempts Mauritius residents from capital gains tax on Indian assets. In this case, Mauritius-based subsidiaries of a U.S. corporation sold Flipkart shares, generating substantial capital gains. India’s tax authorities contended that these subsidiaries lacked independent control and functioned merely as "see-through entities," with control residing in the U.S., thereby denying DTAA benefits and withholding tax exemptions. The Authority of Advance Rulings (AAR) invoked anti-avoidance provisions, emphasizing that the corporate structure aimed to exploit the DTAA for tax benefits. The AAR’s ruling diverged from prior decisions that upheld DTAA exemptions in similar scenarios, sparking debate on consistency and the persuasive value of AAR decisions. This case underscores India's commitment to preventing treaty shopping, reinforcing that capital gains exemptions under the DTAA are not absolute and are subject to scrutiny on economic substance grounds. The ruling has notable implications for multinational corporations employing intermediary holding structures to minimize tax liabilities and signals India’s increasing reliance on anti-avoidance doctrines, such as General Anti-Avoidance Rules (GAAR). This examines the arguments put forth by the counsels and the parameters inadequately perused by the adjudicating authorities and examines the correctness of the Ratio Decidendi. It also provides a Comparative Assessment with Other Judgments and highlights the Jurisprudential Contribution of this case.

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