The Mumbai Income Tax Appellate Tribunal (ITAT) has ruled in favor of eBay Singapore Services Private Ltd, granting it the benefit of the India–Singapore Double Taxation Avoidance Agreement (DTAA) on capital gains arising from the sale of shares in Flipkart Singapore.
The tribunal allowed exemption on short-term capital gains (STCG) of ?2,225.91 crore earned by eBay Singapore on the sale of Flipkart Singapore shares to FIT Holding, a Singapore-based company. ITAT noted that, under Article 13(5) of the India–Singapore DTAA, such gains fall exclusively within the taxing rights of the State of residence of the alienator—Singapore—and are not taxable in India.
The Revenue had contended that eBay Singapore’s management and control were effectively situated in the USA, and therefore, treaty benefits should not apply. However, ITAT concurred with the assessee, observing that while domestic law under Section 9(1)(i) of the Income Tax Act and Explanation 5 may deem indirect transfers of Indian assets taxable in India, such provisions cannot override treaty allocations. By virtue of Section 90(2), the DTAA provisions, if more beneficial, prevail.
The tribunal further noted that the sale of shares of a Singaporean entity to another Singaporean entity does not trigger Indian tax liability, absent a layered transaction intended to circumvent Indian taxation. The ruling distinguished the matter from the ongoing Tiger Global-Flipkart case, where Mauritius-based entities were denied treaty benefits; the Supreme Court has admitted Special Leave Petitions (SLP) in that case.
ITAT emphasised that the India–Singapore treaty lacks a “look-through” clause, unlike treaties with Mauritius or Cyprus, which confer source-state taxing rights on shares deriving value from Indian assets. As a result, gains on the Flipkart Singapore sale could not be taxed in India.
The decision was delivered by a Bench comprising Beena Pillai (Judicial Member) and Renu Jauhri (Accountant Member). Senior Advocate Porus Kaka and Manish Kanth represented the assessee, while Special Counsel Parag Vyas appeared for the Revenue.
Amit Maheshwari, Tax Partner at AKM Global, remarked, “Historically, many high-value exits from India have been structured through Singapore holding vehicles, which is a credible and substance-rich jurisdiction. This ruling reinforces that capital gains on the transfer of Flipkart Singapore shares are taxable only in Singapore. The absence of a look-through clause in the treaty is key, and a valid Singapore Tax Residency Certificate (TRC) is strong evidence of treaty eligibility unless the Revenue proves the structure is a mere conduit.”
He added, “This decision contrasts with the Tiger Global matter, and for global funds, private equity, and multinational investors, it underlines Singapore’s importance as a treaty-friendly jurisdiction, boosting investor confidence in cross-border structuring.”
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