Legal tangle

Investment requires long-term certainty

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The recent Supreme Court judgment in the matter involving the Indian tax authorities and Tiger Global and others (assessees) is being seen as a landmark in India’s tax jurisprudence. It is likely to have a significant bearing on existing foreign investments in India and future inflows.

The matter is related to Tiger Global's Mauritius-based entities selling shares in Flipkart, which was incorporated in Singapore and had business and assets in India. The shares were sold at the time when Walmart Inc, incorporated in the United States, bought a majority stake in Flipkart.

‘The assessees approached the Indian tax authorities, seeking an exemption from tax on gains. However, the tax authorities noted that the assessees were not eligible for exemption under the India-Mauritius Double Taxation Avoidance Agreement (DTAA). After years of legal contestation, the Supreme Court last week upheld the position of the tax authorities.