Residential Status Under Scrutiny After Founder Exits

CA Paras K Savla – [2026] 182 taxmann.com 224 (Article)

1. Introduction

The Income Tax Appellate Tribunal, Bangalore has delivered a judgment in the case of Binny Bansal1- that revisits fundamental principles governing residential status determination under the Income Tax Act, 1961, particularly in the context of individuals relocating abroad. In Binny Bansal (supra), the Tribunal was required to adjudicate upon the residential status of the co-founder of Flipkart for Assessment Year 2020-21, involving capital gains exceeding Rs. 1,626 crores on the sale of shares in Flipkart Private Limited, a Singapore-incorporated entity. The case presents a comprehensive analysis of the interplay between domestic law provisions under Section 6 of the Act and the tie-breaker provisions under Article 4(2) of the India-Singapore Double Taxation Avoidance Agreement.

The appellant, Binny Bansal, filed his return of income for AY 2020-21 declaring total income of Rs. 83,319,930 and claiming residential status as “non-resident.” The assessee’s case was that having relocated to Singapore for employment purposes in February 2019 and having stayed in India for only 141 days during the previous year 2019-20, he qualified as a non-resident under the provisions of Section 6(1)(c) read with Explanation 1 thereto. Consequently, capital gains arising from the sale of shares in a Singapore company to various entities including Tiger Global Eight Holdings, Internet Fund III Pte Ltd, and FIT Holdings SARL were claimed as exempt from Indian taxation under Article 13(5) of the India-Singapore DTAA. The Assessing Officer rejected this claim and held the assessee to be a resident and ordinarily resident of India, bringing to tax long-term capital gains of Rs. 162,54,19,504. The Dispute Resolution Panel confirmed this view, leading to the present appeal before the Tribunal.

2. Factual Matrix

The undisputed facts reveal that the assessee resigned from his position as Chairman and Group Chief Executive Officer of Flipkart Group on November 13, 2018, following the Walmart acquisition. On February 17, 2019, he obtained an employment letter from BTB Consulting Pte Ltd (later known as X to 10X Technologies Pte Ltd) and commenced employment in Singapore on February 22, 2019 after receiving an employment pass from the Singapore Ministry of Manpower on February 11, 2019. His family, comprising his spouse and two minor children, relocated to Singapore in March 2019. Subsequently, on September 12, 2019, the assessee assumed the role of Chief Executive Officer with Three State Capital Advisors Pte Ltd, Singapore, having resigned from X to 10X Technologies on September 4, 2019 while in India.

During the financial year 2019-20, the assessee executed three tranches of share sales in Flipkart Private Limited. On August 28, 2019, he sold 54,596 shares to Tiger Global Eight Holdings and 47,759 shares to Internet Fund III Pte Ltd. On November 27, 2019, he sold 539,912 shares to FIT Holdings SARL. The assessee acquired these shares on October 19, 2011, holding them for more than 24 months, thereby qualifying as long-term capital assets under Section 2(29AA) of the Act. The assessee’s shareholding represented less than 5% of the total share capital and voting power, and he did not possess rights to appoint a majority of directors or control management or policy decisions of Flipkart Private Limited, either on the date of transfer or during the 12-month period preceding the transfers.

The passport records submitted by the assessee revealed that he stayed in India for 318 days in FY 2015-16, 326 days in FY 2016-17, 325 days in FY 2017-18, and 268 days in FY 2018-19, totaling 1,237 days in the four years preceding FY 2019-20. For the relevant previous year 2019-20, the assessee stayed in India for 141 days. The assessee contended that 38 of these days represented a period during which he was stranded in India due to the COVID-19 pandemic, and therefore, the effective stay should be considered as only 103 days.

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