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After Tiger Global, all eyes are on Blackstone, another Wall Street biggie which is waging a high-profile legal battle with India's tax office. The feud, dealing with key questions on taxability of foreign investors and whose outcome may be partly influenced by the recent Supreme Court verdict on Tiger Global, is currently before the apex court.
The Income tax (I-T) department had questioned the tax residency status of the Singapore arm of Blackstone (which had sold shares of an India company) on the grounds that the Singapore entity was controlled by Blackstone US. Since the US parent was the true beneficial owner of Blackstone Singapore, the latter, according to the tax office, was not in position to claim benefits under the treaty between India and Singapore.
The treaty, similar to the one that India has with Mauritius, foreign direct as well as foreign portfolio investors from these jurisdictions do not have to pay capital gains tax on shares which were purchased before April 1, 2017.
Like the Tiger Global ruling, the court proceedings on Blackstone would test the significance of the tax residency certificate (TCR) that offshore investors receive from Singapore and Mauritius authorities to avoid tax.
Blackstone, which won the case in the Delhi High Court, had argued that as per the double taxation avoidance agreement between India and Singapore, capital gain is taxed on the basis of 'legal ownership' and not on the basis of 'beneficial ownership'. Blackstone Capital Partners (Singapore) had acquired equity shares of Agile Electric Sub Assembly in two tranches-in August 2013 and October 2013 - and sold all the shares in July 2015.
Thus, besides the significance of TRC, the Blackstone case would also bring to the fore the question of 'beneficial ownership'.
Thanks to the similarities between the two cases, a senior I-T official told ET that the department feels that the Tiger Global verdict could have a bearing on the Blackstone matter. According to Ashish Karundia, founder of the CA firm Ashish Karundia & Co, "The Income-tax Act seeks to tax the real or beneficial owner, and not merely the legal owner of the income, as previously held by Supreme Court in the Kishanchand Lunidasing Bajaj case.
Consequently, where it is established that the real owner of the income is someone other than the ostensible recipient, the latter cannot claim the benefits of a tax treaty in its own right."
Besides endorsing the adequacy of TRC, the Delhi HC had also held that beneficial ownership is a term linked to passive income and cannot be extended to capital gains. “However, unlike the phrase ‘paid to a resident of the other Contracting State’ which is commonly used in tax treaty articles dealing with passive income, the language used in the capital gains article is deliberately broader and more elastic. This formulation establishes a sufficient nexus between the gains and the resident of the Contracting State, thereby obviating the need to invoke a distinct "beneficial ownership" requirement,” said Karundia.
Like many other treaties, Article 13(4) of the India-Singapore tax treaty uses the phrase ‘derived by’, which clearly connotes beneficial ownership, he said.
The Income tax (I-T) department had questioned the tax residency status of the Singapore arm of Blackstone (which had sold shares of an India company) on the grounds that the Singapore entity was controlled by Blackstone US. Since the US parent was the true beneficial owner of Blackstone Singapore, the latter, according to the tax office, was not in position to claim benefits under the treaty between India and Singapore.
The treaty, similar to the one that India has with Mauritius, foreign direct as well as foreign portfolio investors from these jurisdictions do not have to pay capital gains tax on shares which were purchased before April 1, 2017.
Like the Tiger Global ruling, the court proceedings on Blackstone would test the significance of the tax residency certificate (TCR) that offshore investors receive from Singapore and Mauritius authorities to avoid tax.
Blackstone, which won the case in the Delhi High Court, had argued that as per the double taxation avoidance agreement between India and Singapore, capital gain is taxed on the basis of 'legal ownership' and not on the basis of 'beneficial ownership'. Blackstone Capital Partners (Singapore) had acquired equity shares of Agile Electric Sub Assembly in two tranches-in August 2013 and October 2013 - and sold all the shares in July 2015.
Thus, besides the significance of TRC, the Blackstone case would also bring to the fore the question of 'beneficial ownership'.
Thanks to the similarities between the two cases, a senior I-T official told ET that the department feels that the Tiger Global verdict could have a bearing on the Blackstone matter. According to Ashish Karundia, founder of the CA firm Ashish Karundia & Co, "The Income-tax Act seeks to tax the real or beneficial owner, and not merely the legal owner of the income, as previously held by Supreme Court in the Kishanchand Lunidasing Bajaj case.
Consequently, where it is established that the real owner of the income is someone other than the ostensible recipient, the latter cannot claim the benefits of a tax treaty in its own right."
Besides endorsing the adequacy of TRC, the Delhi HC had also held that beneficial ownership is a term linked to passive income and cannot be extended to capital gains. “However, unlike the phrase ‘paid to a resident of the other Contracting State’ which is commonly used in tax treaty articles dealing with passive income, the language used in the capital gains article is deliberately broader and more elastic. This formulation establishes a sufficient nexus between the gains and the resident of the Contracting State, thereby obviating the need to invoke a distinct "beneficial ownership" requirement,” said Karundia.
Like many other treaties, Article 13(4) of the India-Singapore tax treaty uses the phrase ‘derived by’, which clearly connotes beneficial ownership, he said.
( Originally published on Jan 17, 2026 )
