The Income Tax Department has restarted assessment proceedings against Tiger Global following a favorable Supreme Court ruling on capital gains tax related to the sale of Flipkart shares to Walmart for Rs 14,500 crore. Approximately Rs 967.52 crore has been withheld as tax deducted at source, which will now be addressed during the assessment and consequential demand proceedings.
The assessment proceedings for AY 2019–20, which were previously on hold, will now resume as per the Supreme Court’s decision. The Assessing Officer will proceed to finalize the assessments in accordance with the court’s ruling, an official confirmed.
The Tiger Global case highlights the complexities of tax litigation and pending demands. Taxpayers have the right to challenge orders and exhaust available appellate channels, emphasizing the importance of the legal process in resolving tax disputes, the official noted.
Justice J.B. Pardiwala stressed the significance of protecting the state’s tax base in the judgment, recognizing the state’s legitimate interest in safeguarding public revenue, especially in high-value transactions. Pending demands or withheld refunds are not necessarily coercive but often stem from unresolved legal questions awaiting judicial resolution, the official explained.
The tax treatment of capital gains from Tiger Global’s exit from Flipkart during Walmart’s acquisition in 2018 triggered the current matter. The transaction, involving significant monetary values, raised questions about the applicability of capital gains tax in India, particularly in relation to treaty benefits and potential abuse of such agreements.
