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    Flipkart stake sale: Tax body finds Tiger Global guilty of tax avoidance, rejects plea for exemption

    Flipkart stake sale: Tax body finds Tiger Global guilty of tax avoidance, rejects plea for exemption

    Flipkart stake sale: Tax body finds Tiger Global guilty of tax avoidance, rejects plea for exemption
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    By Mugdha Variyar   IST (Published)

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    The Authority for Advance Rulings has rejected Tiger Global's application for capital gains tax exemption on its stake sale in Flipkart to Walmart in 2018.

    The Authority for Advance Rulings has rejected Tiger Global's application for capital gains tax exemption on its stake sale in Flipkart to Walmart in 2018.
    The AAR also came down heavily on the PE player, stating that the company had set up a Mauritius entity only to benefit from the India-Mauritius Treaty while the 'head and brain' of the company was in the United States.
    Tiger Global's Mauritius-based entity had made an application to the Delhi AAR seeking treaty benefits under India-Mauritius Treaty for a nil withholding of tax.
    Tiger Global had sold 17 percentage points of its 22 percent stake in Flipkart in the Walmart deal for over Rs 14,500 crore.
    The PE firm moved AAR after an assessing officer rejected its application for capital gains tax exemption.
    In its ruling, sourced from Tax Sutra, AAR said the transaction was designed prima facie for "avoidance of tax", while also adding that it was ‘inescapable conclusion’ that the  Mauritius entity was set up to get benefit under India-Mauritius DTAA.
    AAR said the ‘head and brain' of the company and consequently its control was situated not in Mauritius but in the US.
    Tiger Global said it did not have comments, while Flipkart did not respond.
    Legal experts said the next route for Tiger Global could be to challenge the AAR ruling, but the company will likely receive tax notices on the Flipkart deal.
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