In Brief
Mauritius-based investment companies sought advance rulings on capital gains tax from selling shares in a Singapore company (Flipkart) to a Luxembourg entity. The Authority for Advance Rulings rejected their applications as prima facie tax avoidance schemes. The High Court quashed this, holding them entitled to treaty benefits under the India-Mauritius treaty. The Supreme Court allowed appeals by the Revenue, upholding the AAR's jurisdiction to reject the applications. The Court held that mere Tax Residency Certificates are insufficient after recent statutory amendments; the transaction fails GAAR scrutiny because control lay with a US entity, the transaction was structured to avoid taxation, and the sale occurred after 1 April 2017, triggering GAAR. Treaty benefits were properly denied as tax avoidance was established.
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