SC ruling in Tiger Global matter: old cases not to be reopened, assures CBDT
The ruling declared the capital gains from Tiger Global’s $1.6 billion stake sale taxable in India.
In the wake of the Supreme Court ruling favouring Income Tax Department in the matter of Tiger Global, Central Board of Direct Taxes has confirmed to businessline that old cases will not be reopened. This response seeks to reassure investors as well as invested entities who are anxious that this ruling might lead to increased scrutiny of past deals routed through Mauritius, Singapore or similar jurisdictions including IPOs (Initial Public Offerings) and M&As (Merger & Acquisition).
Asked by businessline about whether the SC verdict would impact past deals and reopening of old cases, sources in the Central Board of Indirect Taxes & Custom firmly said, “No, it would not.”
On Thursday, the Supreme Court ruled in favour of the Income Tax Department by setting aside the Delhi High Court’s judgment quashing the tax demand of Tiger Global. This ruling declared the capital gains from the $1.6 billion stake sale taxable in India.
“In our view, once it is factually found that the unlisted equity shares, on the sale of which the assessees derived capital gains, were transferred pursuant to an arrangement impermissible under law, the assessees are not entitled to claim exemption under Article 13(4) of the DTAA (Double Taxation Avoidance Agreement),” a division bench of Justices J B Paradiwala and R Mahadevan said while disposing an appeal filed by the Authority for Advance Rulings (Income Tax).
Further, the bench said that Revenue has proved that the transactions in the instant case are impermissible tax-avoidance arrangements, and the evidence prima facie establishes that they do not qualify as lawful. “Capital gains arising from the transfers effected after the cut-off date, i.e., 01.04.2017, are taxable in India under the Income Tax Act read with the applicable provisions of the DTAA. The judgment of the High Court therefore deserves to be set aside,” the bench ruled.
Decoding the judgement, Rajan Sachdev, Partner at Nangia Global, said that the Delhi High Court had earlier ruled in favour of the Assessees, holding that TRCs, satisfaction of LOB conditions and the grandfathering provisions under the India–Mauritius DTAA entitled them to treaty protection, in the absence of proven fraud or sham.
However, the SC took a contrary view after a threadbare analysis of the India-Mauritius DTAA, CBDT Circulars 682 and 789, the rulings in Azadi Bachao Andolan and Vodafone, GAAR provisions, the Finance Act, 2013 and the 2017 treaty amendments. The Court observed that these amendments were introduced to curb round-tripping and treaty abuse, noting that mere possession of a TRC cannot bar enquiry where an interposed entity functions as a conduit to avoid tax. It further held that CBDT circulars stood superseded by statutory amendments and could not override legislative intent.
“Crucially, the Court ruled that GAAR applies to any arrangement yielding tax benefits on or after 1 April 2017, irrespective of the date on which the investment was made, rendering the cut-off date irrelevant. On facts, the Court concluded that the Revenue had established an impermissible avoidance arrangement, denied DTAA benefits and upheld the taxability of the gains in India,” Sachdev said.
According to Vinod Joseph, Partner, Economic Laws Practice, this verdict will make foreign investors reconsider the use of tax friendly jurisdictions such as Mauritius or Cayman Islands or Cyprus. “It may also lead to increased scrutiny of past deals routed through Mauritius, Singapore, or similar jurisdictions, including IPOs and M&As. We may see more litigation and a shift toward substance-based structures, such as those in GIFT City,” he said.
Published on January 16, 2026
