SC Verdict on Tiger Global: A Case of Substance Over Form

The Supreme Court’s ruling in the Tiger Global case quietly but firmly shuts the door on a long-running narrative in Indian tax structuring: that form, if layered cleverly enough offshore, can substitute for substance. By upholding the Revenue’s right to tax the capital gains from the Flipkart exit, the court has made it clear that treaty protection is not something that can be engineered in isolation from economic reality.

The US-based investment firm Tiger Global Management LLC set up three subsidiaries in the early 2010s as Mauritius-based investment vehicles for its overseas investments. These companies acquired shares in Flipkart Pvt. Ltd. The structure and the intention were familiar, almost textbook.  Flipkart was founded in 2007 by the Bansals and incorporated in Singapore. Thereafter, Flipkart invested in multiple companies in India in different related businesses. The value of its shares was derived substantially from its operations in India. Since its core operations, customers, and subsidiaries are in India, Flipkart is now planning for a reverse flip: moving back to India.

In 2018, the Tiger Global–affiliated Mauritian entities sold their Flipkart shares to Fit Holdings S.A.R.L, a company incorporated under the laws of Luxembourg. The transaction resulted in capital gains of approximately ₹145 billion. The Delhi High Court accepted the claim for exemption under the India–Mauritius tax treaty, despite the Authority for Advance Rulings having already flagged that the arrangement appeared, on its face, to be designed to avoid tax.

On January 15, 2026, the Supreme Court reversed the exemption and held that the gains were taxable in India, bringing the focus back to where value was actually created, and where control truly lay. The Court framed its reasoning squarely around the doctrine of substance over form: an all-pervasive principle that has long animated both tax law and accounting. This article examines this classic judgment through the lens of substance over form.

Substance Over Form: All-Pervasive Principle
For legal analysis, the substance-over-form principle requires that attention be paid to the true economic nature of a transaction rather than its outward legal structure. The principle stresses the importance of unpacking the letters and lines of complex contracts and examining the actual flow of funds, transfer of risks, and shift of control. Indian tax law has long recognised this approach, just as accounting standards such as IFRS and Ind AS insist that transactions be recorded according to economic reality rather than contractual appearance.

In the Tiger Global judgment, the Supreme Court pierced the legal form to understand and reveal the actual intent of the complex web of transactions. The Court looked at the investment as a whole: from the setting up of the Mauritian entities to how they were run, and finally to the exit. On that view, it left little room for doubt: when legal form and economic reality point in different directions, it is substance over form that must prevail.

Creation of Mauritian Entities
The Court held that mere incorporation in Mauritius and possession of a Tax Residency Certificate, by themselves, are insufficient to confer treaty benefits in the absence of commercial justification. Echoing the AAR, it accepted that Tiger Global’s Mauritian entities were established primarily to access the India–Mauritius treaty, rather than to perform any independent commercial function. While separate legal entities existed on paper, their economic role was confined to that of conduits for the US parent.

Management and Control
The Court took a closer look at control and management of the Mauritian entities to examine the genuineness of residence and the intentions of the transaction. It accepted the Revenue’s assertion that key commercial decisions were taken outside Mauritius, even if formal board meetings used to take place there. While governance in Mauritius existed in form, it did not exist in substance. Formal compliance, the Court emphasised, cannot override factual dependence. In such situations, the Indian tax authorities retain the power to examine the substance of the transaction for treaty abuse. At that point, treaty protection falls away.

An Impermissible Avoidance
The Court was equally clear on the boundary between legitimate tax planning and impermissible avoidance. Taxpayers are free to organise their affairs efficiently, but only within the limits of commercial reality. The Supreme Court held that once a structure is shown to be artificial, designed primarily to avail tax benefits without any corresponding business purpose, it crosses the line from avoidance into evasion. Evasion does not come with benefits under tax treaties. Viewed through this lens, the outcome was inevitable. The capital gains arising from the transfer of Flipkart shares by Tiger Global Associates are taxable in India.

The Supreme Court’s ruling in Tiger Global decisively reinforces the primacy of substance over form in international tax structuring. By looking beyond the words of a formal contract to uncover the real intent, the Court sends a clear message that a contract lacking genuine commercial substance will not be protected by any form of international treaty. The judgment may usher in a new era of international finance and taxation, where countries, companies, and courts will be forced to focus on the substance of contracts instead of just relying on legal form.

The wider implications are difficult to ignore too. Over the past decade, India has steadily hardened its stance against treaty shopping and aggressive tax structuring, through a mix of legislative tools such as the General Anti-Avoidance Rule and a more substance-driven judicial approach.

The Supreme Court’s judgment has reminded us of the wise words of Lord Mansfield: “Equity looks to the intent rather than the form.” In Tiger Global, the Court applied that principle to today’s world of layered holding companies and offshore exits, where appearances may be convincing in form yet misleading in substance.