GAAR Can Deny Mauritius DTAA Capital Gains Exemption Where Arrangement Is Impermissible: Supreme Court Sets Aside Delhi High Court in Tiger Global
Case Name: The Authority for Advance Rulings (Income Tax) & Ors. v. Tiger Global International II Holdings; connected appeals against Tiger Global International IV Holdings and Tiger Global International III Holdings
Citation: 2026 INSC 60
Date of Judgment/Order: 15 January 2026
Bench: Justice J.B. Pardiwala and Justice R. Mahadevan
Held: The Supreme Court held that where the Revenue establishes that the impugned transactions are impermissible tax-avoidance arrangements, treaty protection under the India–Mauritius DTAA cannot be used to claim exemption, and GAAR (Chapter X-A) becomes applicable; consequently, the Authority for Advance Rulings was justified in rejecting the assessees’ applications as barred by the threshold condition under proviso (iii) to Section 245R(2), and capital gains from transfers effected after 01.04.2017 are taxable in India under the Income Tax Act read with the DTAA.
Summary: These connected civil appeals arose from the Delhi High Court’s common order dated 28.08.2024 allowing the assessees’ writ petitions and quashing the AAR’s order dated 26.03.2020, in a dispute concerning taxability in India of capital gains arising to Mauritius-incorporated Tiger Global entities from sale of shares of a Singapore company (Flipkart Pvt. Ltd., Singapore) deriving substantial value from Indian assets; the AAR had rejected the advance ruling applications at the threshold on the view that the arrangement was prima facie designed for tax avoidance and that exemption under the Mauritius treaty was not intended for gains from shares of a non-Indian company, whereas the High Court held the entities had substance, TRCs/LOB were significant, and the transaction was protected/grandfathered; the Supreme Court, however, concluded that once the transfers are found to be pursuant to an impermissible arrangement, treaty exemption cannot be claimed and GAAR applies, warranting reversal of the High Court’s view and restoration of the Revenue’s position.
Decision: The Supreme Court allowed all the appeals, set aside the impugned judgment of the Delhi High Court, made no order as to costs, and disposed of pending applications, if any.