ITAT Bangalore Rules Co‑Founder of Flipkart is Resident in India: Detailed Case Summary

1. Background of the Dispute

The case concerns Shri Binny Bansal, co‑founder of Flipkart, who approached the ITAT Bangalore challenging his assessment for Assessment Year 2020-21. The key controversy was:

  • Whether the assessee was resident in India or non-resident during Financial Year 2019-20
  • Consequent taxability of:
    • Global income, and
    • Capital gains on sale of shares of Flipkart Private Limited (Singapore)

The assessee claimed that he was a tax resident of Singapore and hence entitled to benefits under the India-Singapore Double Taxation Avoidance Agreement (DTAA), particularly Article 13(5) relating to capital gains. The Revenue, however, treated him as resident and ordinarily resident in India, bringing his global income, including capital gains on sale of foreign shares, to tax in India.

The ITAT ultimately upheld the view of the Assessing Officer (AO) and Dispute Resolution Panel (DRP) and dismissed the appeal.

2. Essential Facts of the Case

2.1 Professional and Residential History

  • The assessee is an Indian citizen and one of the founding members of Flipkart, an Indian e‑commerce group.
  • He held key leadership positions in the group, including Chairman, Chief Operating Officer, and Group Chief Executive Officer.
  • In August 2018, the Walmart group acquired a majority stake in the Flipkart group.
  • Subsequently, the assessee resigned from his Flipkart position with effect from 13.11.2018.
  • The assessee claimed that he:
    • Left India in February 2019
    • Took up employment in Singapore initially with Xto10X Technologies Pte Ltd (formerly BTB Consulting Pte Ltd)
    • Subsequently shifted employment to Three State Capital Advisors Pte Ltd, Singapore
    • Relocated his family to Singapore in March 2019 and continues to reside there.

The assessee filed his return of income for AY 2020-21 in the status of non-resident declaring income of ₹ 8,33,19,930 and claimed a large refund owing mainly to tax deducted at source (TDS) on sale of Flipkart shares.

2.2 Transactions in Question

During FY 2019-20, the assessee:

  • Sold listed equity shares of Indian companies on Indian stock exchanges; and
  • Disposed of shares of Flipkart Private Limited, a company incorporated in Singapore, as under:
  1. 28.08.2019 – Sold 54,596 shares to Tiger Global Eight Holdings
  2. 28.08.2019 – Sold 47,759 shares to Internet Fund III Pte Ltd
  3. 27.11.2019 – Sold 5,39,912 shares to FIT Holdings SARL

Another critical fact:

  • On an earlier transfer of 5,39,912 shares of Flipkart Private Limited to FIT Holdings SARL dated 21.06.2019, the buyer deducted TDS of ₹ 656,963,526 on long‑term capital gains.

The assessee’s stand was that:

  • Capital gains on sale of Flipkart Singapore shares were not taxable in India under:
    • Article 13(5) of the India-Singapore DTAA (on the footing that he was a Singapore tax resident), and/or
    • Explanation 7(a) to Section 9(1)(i) of the Income Tax Act 1961, as applicable to indirect transfer rules.

He sought refund of the TDS deducted on these transactions.

3. Assessment Proceedings: Core Issues Examined

3.1 Selection for Scrutiny and Initial Jurisdiction Issue

  • The return was selected for scrutiny largely due to the high refund claim.
  • A notice under Section 143(2) dated 29.06.2021 was first issued by the National Faceless Assessment Centre (NFAC).
  • The assessee objected on the ground that, as a non-resident under International Tax charge, NFAC did not have jurisdiction in view of CBDT instructions.
  • Subsequently, the case was transferred to the DCIT (International Taxation), Circle 1(1), Bangalore.
  • No fresh notice under Section 143(2) was issued by the jurisdictional AO after transfer.

This jurisdictional defect was later taken as a ground in appeal.

3.2 Residential Status under Domestic Law – Section 6

The AO examined the assessee’s presence in India and found that:

  • In the four previous years prior to FY 2019-20, the assessee was in India for 1237 days, far exceeding the threshold of 365 days.
  • For FY 2019-20, he was physically present in India for 141 days.

On this basis, the AO invoked Section 6(1)(c) of the Income Tax Act 1961 and concluded that the assessee satisfied:

  1. Presence in India for 365 days or more in the four preceding previous years, and