Recently, the Delhi High Court (HC) delivered a noteworthy judgment quashing the ruling of the Authority for Advance Rulings (AAR) that denied Tiger Global International III Holdings a capital gains tax exemption on its 2018 sale of Flipkart Singapore shares to Walmart. The AAR had held that the transaction was structured to avoid taxes under the India-Mauritius Double Tax Avoidance Agreement (DTAA). The HC reversed the decision of AAR by upholding the validity of transactions protected by Article 13(3A) of the DTAA, which applies to deals made before major treaty changes. It also reaffirmed that the Tax Residency Certificate (TRC) is valid unless challenged with substantial evidence of fraud.
