The Bengaluru bench of the Income Tax Appellate Tribunal (ITAT) has delivered a significant ruling, dismissing a claim by Flipkart co-founder Binny Bansal to be treated as a non-resident for a specific financial year. The tribunal denied him the benefits of the India-Singapore Tax Treaty that he had sought concerning capital gains from the sale of his Flipkart shares.
The Core of the Tax Dispute
In his appeal, Binny Bansal argued that during the financial year 2019-20, he was a resident of Singapore, having moved there for employment. He contended that this status meant he should be considered a person 'being outside India.' Consequently, he claimed that the capital gains arising from the sale of his Flipkart shares on August 28, 2019, and November 27, 2019, were not taxable in India, seeking protection under the bilateral tax treaty.
However, the tax department opposed this stance. They argued that the relaxations in the Income Tax Act pertaining to residential status, which Bansal cited, apply only to individuals who are already non-residents. The department maintained that these provisions could not be invoked by an assessee who was a resident in the immediately preceding year.
ITAT's Detailed Ruling and Rationale
In a comprehensive 189-page order dated January 9, the tribunal meticulously examined the case. It held that Bansal had been in India for more than 60 days during the relevant period, thereby satisfying the residential conditions under section 6(1)(c) of the Income Tax Act. The bench explicitly stated, "We hold that the assessee (Bansal) has been in India for more than 60 days... and is not entitled to the relaxation in the period of stay... undisputedly, assessee is an Indian national."
The tribunal further elaborated on the potential ramifications of accepting Bansal's argument. It noted that if his stand for the Assessment Year 2020-21 was accepted—where he sought the benefit of an extended period of 182 days instead of 60 days—it could set a precedent where "every person who visits India will get such an extension of period every year." This, the tribunal implied, could lead to widespread misuse of the provision.
Partial Relief and Broader Context
While the core non-resident claim was dismissed, the tribunal's final order stated that the appeal filed by the assessee was 'partly allowed.' This indicates that the bench upheld some of the ancillary arguments presented by Bansal's legal team, though the primary tax treaty benefit was denied.
This ruling brings clarity to a high-profile tax case involving one of India's most prominent startup founders. Binny Bansal, who co-founded Flipkart with Sachin Bansal in 2007, stepped down from the company's board in 2024, marking the end of his direct association with the e-commerce giant. The ITAT's decision underscores the stringent application of residential status tests under Indian tax law, especially for Indian nationals.
