Summary: India’s tax landscape has dramatically shifted after the Supreme Court’s Tiger Global ruling, and the ITAT’s decision in Hareon Solar Singapore shows just how far the ripple travels. As a result, only structures with genuine substance, clear commercial purpose, and documented on‑ground activity will withstand India’s evolving anti‑avoidance scrutiny.

In a watershed ruling, the Indian Supreme Court (“SC”) decided in favour of the tax authority in Tiger Global International,[1] branding the contested transaction as “illegal,” “sham,” and “impermissible avoidance arrangements”. The judgment signals a decisive shift in India’s stance on offshore investment structures, clarifying that a Tax Residency Certificate (“TRC”) is no longer a foolproof shield for claiming treaty benefits.

In the post-Tiger Global landscape, a central question animates cross-border investment structures: Are the entities set up in treaty jurisdictions genuine commercial vehicles, or merely shell companies crafted to harvest treaty advantages? This debate is critical in interpreting limitation-of-benefits (“LOB”) clause.

Against this backdrop, the Delhi Income Tax Appellate Tribunal (“ITAT”) delivered its ruling in Hareon Solar Singapore Private Limited (“Singapore Co.”).[2] Although the hearing had formally concluded on January 5, 2026, the ITAT “for the sake of completeness” explicitly referenced the Tiger Global judgment pronounced on January 15, 2026. In its decision dated January 30, 2026, the ITAT undertook a detailed examination of whether the Singapore-incorporated investment entity demonstrated adequate commercial substance and actual control and management in Singapore, to qualify for protection under the India-Singapore Tax Treaty. The ruling offers timely and consequential insights into how LOB provisions and the principle of substance over form will be interpreted in a post-Tiger Global era, reshaping the contours of cross-border investments and its tax planning for years to come.

FACTS

Singapore Co., incorporated under Singaporean law, is a wholly owned subsidiary of Hareon Solar Co. Ltd. (“Hong Kong Co.”), which is wholly owned by Hareon Solar Technology Co. Ltd. (“China Co.”), the ultimate holding company.

In June 2015, Renew Solar Power Private Limited, Renew Power Ventures Private Limited, China Co., Singapore Co., and Renew Solar Energy (Karnataka) Private Limited (“Renew Karnataka”) entered into a Joint Venture Agreement (“JVA”), effective July 1, 2015, under which China Co. committed to supply PV Modules for Renew Karnataka’s 60 MW solar power project in India.

Singapore Co. was capitalised through equity infusions from Hong Kong Co. During the relevant assessment year, Singapore Co. transferred shares in Renew Karnataka, generating capital gains that became the subject of tax dispute. Claiming India-Singapore Tax Treaty benefits, Singapore Co. submitted a TRC, confirming its Singapore tax residency. However, the Assessing Officer (“AO”) denied treaty relief by invoking the LOB clause under Article 24A of the India Singapore Tax Treaty, holding that Singapore Co. was a shell entity lacking commercial substance, with beneficial ownership and effective management residing outside Singapore.

Singapore Co. argued it had substantive presence in Singapore, contending that key investment decisions were taken at Board meetings held physically in Singapore and that it had incurred operating expenses exceeding the treaty’s LOB threshold requirements.

DECISION

The ITAT made several key observations while examining Singapore Co.’s claim for capital gains exemption:

1. Singapore Co is a 100% subsidiary of Hong Kong Co., ultimately controlled by China Co.
2. Singapore Co. had equity share capital of US$ 2,48,50,700, entirely held by Hong Kong Co., with only negligible third-party liabilities.
3. As of December 31, 2019, property, plant, and equipment totalled US$ 1,021, while investments stood at US$ 1,13,93,821, underscoring the absence of physical operations.
4. No evidence of Board meetings held in Singapore was provided (such as travel records, hotel bills, etc.).
5. For fiscal year 2019, Singapore Co. reported income derived almost entirely from gains and interest on investment disposal. Expenditure of S$ 200,000+ comprised only of legal/ professional fees, along with forex losses.
6. Singapore Co. had no employees, no independent office, and lacked typical business expenses, such as communications, electricity, travel, or promotional costs.
7. Singapore Co. was merely an investment conduit for Renew Karnataka. The Chinese parent could have invested directly; the absence of independent funding or revenue-generating operations indicated the entity existed primarily to avail treaty benefits.
8. Only two of the five directors were Singaporean residents; bank signatory authority and key decisions rested with non-Singaporean directors.
9. No LOB compliance certificate from Singapore tax authorities was provided.

Based on these findings, the ITAT determined that the Singaporean entity lacked commercial justification and substantive operations, aside from facilitating capital gains exemption. As Singapore does not tax such gains, while direct investment from China or Hong Kong would trigger Indian tax, the ITAT concluded that the structure failed to meet LOB requirements and was designed solely to obtain treaty benefits.

TAKEAWAYS

The Tiger Global ruling and Hareon Singapore decision necessitates reassessment of existing offshore investment structures. TRCs and minimal expenditure compliance are no longer enough — Indian authorities now have legal/ precedential backing to challenge structures lacking genuine commercial substance and rationale.

Investors can consider the following measures:

• Structural review: Audit existing offshore structures in treaty jurisdictions, to assess GAAR exposure and whether arrangements satisfy heightened substance requirements — examining decision-making autonomy, operational presence, and commercial rationale beyond tax optimisation.

• Substance enhancement: Strengthen economic substance by appointing local directors with genuine authority, maintain physical office premises, hire local employees, and incur genuine operational expenditures. Absence of conventional expenses (communications, electricity, travel, staff costs, etc.) will attract scrutiny.

• Documentation: Maintain contemporaneous records evidencing commercial rationale for intermediate structures beyond treaty access — such as treasury functions, regional management, or operational synergies.

• Transaction documentation: Review SPAs, subscription agreements, and shareholders’ arrangements for appropriate indemnities, tax covenants, and risk allocation against treaty benefit denials. Consider tax insurance for material transactions with uncertainty.

• Enhanced scrutiny preparation: Anticipate requisitions for documents, including passport records proving directors’ physical presence, bank signatory records, employment contracts, lease agreements, and invoices towards operational expenses.

• Restructuring: Where structures cannot withstand scrutiny, one can consider consolidating entities, relocating to jurisdictions with genuine operational presence, or enhancing operational activities.

• Ongoing disputes: Develop defence strategies that distinguish adverse precedents, provide evidence of compliance with LOB requirements, and contest classification as ‘impermissible avoidance arrangement’ with substantive proof.

The post-Tiger Global era demands genuine commercial substance, demonstrable business purpose/ rationale, and compliance with both letter and spirit of tax treaties. Technical compliance with minimum requirements is insufficient where arrangements are primarily structured to facilitate tax avoidance. Therefore, the Tiger Global ruling is widely regarded as a landmark judgement that will retain its precedential value in all cases involving treaty benefit disputes.

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[1] Refer to our recent blog ‘Treaty Shopping Safari Ends Here: Footprints from Tiger Global’ for more details. (Treaty Shopping Safari Ends Here: Footprints from Tiger Global | India Tax Law)

[2] ITA No. 2226/Del/2024 dated January 30, 2026.