ITAT Rules eBay Singapore Eligible for DTAA Benefit on Flipkart Share Sale

The Mumbai Income Tax Appellate Tribunal (ITAT) has ruled that eBay Singapore Services Private Ltd is entitled to the benefits under the India–Singapore Double Taxation Avoidance Agreement (DTAA) on gains from the sale of shares in Flipkart Singapore. The tribunal held that short-term capital gains (STCG) of ₹2,225.91 crore earned from the transaction are not taxable in India.

Tribunal’s Ruling and Key Observations

The ruling was delivered by a Bench comprising Beena Pillai (Judicial Member) and Renu Jauhri (Accountant Member). Senior Advocate Porus Kaka and Manish Kanth appeared on behalf of the assessee, while Special Counsel Parag Vyas represented the Revenue.

ITAT observed that, under Article 13 (5) of the India–Singapore DTAA, capital gains arising from the sale of shares are taxable only in the country where the seller is a resident. Since eBay Singapore is a resident of Singapore, the taxing rights rest with Singapore and not India.

The Revenue had argued that eBay Singapore’s management and control were effectively in the United States, making it ineligible for treaty benefits. However, the tribunal disagreed, stating that domestic provisions such as Section 9 (1) (i) and Explanation 5 of the Income Tax Act cannot override treaty protections.

Applicability of Treaty Provisions

ITAT clarified that Section 90 (2) of the Income Tax Act allows taxpayers to rely on treaty provisions if they are more favourable than domestic tax laws. The tribunal also noted that the transaction between two Singapore-based entities—eBay Singapore and FIT Holding—does not attract Indian taxation, as there was no indication of a structure aimed at avoiding tax in India.

The ruling further distinguished this case from the Tiger Global-Flipkart matter, where Mauritius-based entities were denied treaty benefits and the issue remains under review by the Supreme Court.

Treaty Structure and Absence of Look-Through Clause

The tribunal highlighted that the India–Singapore DTAA does not include a “look-through” clause, unlike treaties with Mauritius or Cyprus. Such clauses generally grant source-based taxing rights on shares deriving value from Indian assets. In the absence of this clause, India does not have taxing rights on eBay Singapore’s share sale.

Read more: Flipkart to Infuse $300 Million Into Fintech Subsidiary Super.money

Significance of the Ruling

The ITAT decision provides clarity on the taxation of cross-border share transactions involving Singapore-based entities. It underscores the importance of tax residency certificates (TRCs) as proof of treaty eligibility and reinforces the principle that treaty provisions take precedence over domestic tax rules when beneficial to the taxpayer.

This judgment is expected to have implications for similar cases involving capital gains on overseas share sales structured through Singapore-based holding entities.

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