The Delhi High Court granted a stay against initiation of assessment proceedings by tax authorities into sale of Tiger Global’s 17% stake in Flipkart to Walmart for Rs 14,500 crore in 2018. Tiger Global had claimed nil witholding tax on capital gains from the exit, which was rejected by the Authority of Advance Rulings (AAR).
The Delhi High Court has issued notice to income tax authorities for filing a response within 10 weeks, and will hear the matter next on January 18, 2021, people familiar with the development told ET.
Tiger Global International IV Holdings had filed an appeal seeking injunction against a Mumbai AAR’s order issued in March this year that said the stake sale was prima facie designed to avoid tax.
Tiger Global had held its stake in Flipkart through its arms in Mauritius. It had sought to treat its transaction with Walmart under the India-Mauritius Double Tax Avoidance Agreement. Three of its companies had approached the AAR after the income tax department rejected its request that the US retailer shouldn’t be asked to withhold tax on capital gains arising from its $16-billion buyout of the Indian ecommerce firm.
The AAR had rejected this contention and ruled in favour of the income tax authorities adding that the benefits of India-Mauritius tax treaty would not be available in this transaction.
Tiger Global was among the leading investors in Flipkart and had sold 17% of its 22% in the company to Walmart. In September 2019, Flipkart cofounder Binny Bansal had sold his shares in the company worth $14 million to two Tiger Global funds – Internet Fund III Pte Ltd and Tiger Global Eight Holdings.
Leave a Reply