Binny Bansal's "being outside India" claim falls flat

The Bangalore ITAT rejected Binny Bansal's claim of non-resident status, declaring him a resident and ordinarily resident in India. This decision brought his global income under Indian tax laws, making the capital gains of approximately ₹198 crore from the sale of Flipkart (Singapore) shares taxable in India for FY 2019-20.

The judgment makes for a compelling read, particularly in the way the tax department and the Ld. Additional Solicitor General (‘ASG’), meticulously pieced together the chronology of events — from BB’s resignation from Flipkart India, to his subsequent migration to Singapore, the sequence of his overseas employments, his repeated returns to India, and the pattern of his investments —to argue that these steps, taken together, reflected a carefully orchestrated structure rather than a clean break from India.

This summary only highlights the rebuttals made by the Revenue department, making it particularly telling of how it now scrutinizes cross-border relocations and transaction sequencing when examining tax residency changes and treaty claims — a point that founders and high-net-worth individuals should keep firmly in mind while structuring overseas moves and exit transactions.

Key timelines of date of departure and arrival of BB from and to India: 

Date	Event
13.11.2018	Resigned as chairman & Group CEO of Flipkart Group
03.12.2018	Incorporation of X to X to 10X Technologies Pvt Ltd, an Indian company
14.01.2019	Incorporation of X to X to 10X Technologies Pte Ltd, Singapore (‘X to 10X’) (a Singapore entity in which BB held promoter interest)
11.02.2019	Employment Pass issued by Singapore Government
17.02.2019	Executed employment agreement with X to 10X
21.02.2019	BB left India and arrived in Singapore
22.02.2019	Commenced employment with X to 10X
Period between April 2019 to August 2019	BB frequently travelled to India
20.08.2019	BB signs an executive agreement with e Three State Capital Advisors Pte. Ltd (‘Three State’) (where BB was founder, promoter and substantial primary shareholder), before resigning from X to 10X
28.08.2019	BB sold following shares of Flipkart Singapore as under: i)       54,596 shares to Tiger Global Eight Holdings ii)     47,759 shares to Fund III Pte Ltd
01.09.2019	BB comes to India
05.09.2019	BB claims to have resigned from X to 10X (while being present in India, without providing credible evidence of any formal notice, email communications and with no supporting Board minutes available from the company taking on record his resignation)
10.09.2019	Left India for Singapore
12.09.2019	A new work pass card is received from Singapore Ministry of Manpower and BB took up employment with Three State
27.11.2019	BB sold 5,39,912 shares of Flipkart Singapore to FIT Holdings SARL

Overall in FY 2019-20, BB’s number of stay in India was 141 days (which was beyond 60 days but less than 182 days). In the same financial year, he sold 642,267 shares of Flipkart (Singapore) while claiming to be a tax resident of Singapore, and accordingly sought to invoke Article 13(5) of the India–Singapore DTAA, under which the taxing rights over such capital gains vest exclusively with Singapore.

I.  Revenue’s arguments disregarding BB’s claim of being a NR under the Income-tax Act:

👉🏼Continuity of residence: Prior the FY 2019-20, BB has consistently remained in India for more than 182 days, evidencing a pattern of continuous, prolonged and sustained presence in India.

👉🏼 Substitution of 60 days with 182 days for visiting NRIs: For the 182 days relaxation as available to visiting NRIs under Explanation 1(b) to section 6(1)(c) to apply, the individual must already be situated outside India in a manner denoting a settled residential base, such that India becomes a place of visit and not residence. In the absence of such permanency at the commencement of the relevant FY, there is no occasion to invoke the relaxation of 182 days.  

👉🏼 Legislative Intent: The relaxation of number of days of stay in India for non-residents (now 182 days) as provided under Explanation 1 to section 6(1) was originally introduced by the Finance Act, 1978 to protect Indian citizens rendering services abroad who come to India on leave or vacation, so that they do not inadvertently become Indian tax residents.

👉🏼 CBDT Circular No. 554 dated 13.02.1990: Issued under the heading “Liberalisation of the criterion for determining residential status in the case of Non-resident Indians”, the Circular makes it clear that the benefit of the extended 182 days was intended only for NRIs and not for individuals who were residents of India in the immediately preceding year

👉🏼Residential status in prior years: Since BB was a resident up to FY 2018-19, he could not be equated with a non-resident Indian “coming on a visit” from abroad. His case, therefore did not satisfy the letter or spirit of law.

👉🏼 Interpretation of “being outside India”: The phrase cannot be stretched to cover a person who was resident in India until the immediately preceding year and who undertakes only a short departure abroad before the commencement of the financial year, while continuing to make frequent visits and maintain a substantial presence in India.

👉🏼 Employment sequencing: From timelines, BB remained employed with X to 10X and his resignation therefrom, while on his visit to India in September 2019, to take up employment with Three State, was alleged to have been structured merely to create the appearance of compliance with condition of Explanation 1(a) to section 6(1)(c) of the IT Act i.e., leaving India in the relevant PY for employment.

👉🏼 BB’s Control over foreign entities: The claim of a new and independent employment with Three State was challenged on the basis that both X-to-10X and Three State were entities under his effective control, with substantial shareholding vested in him. Treating such intra-group role shifts and restructuring as “fresh employment” would result in an unwarranted tax advantage.

Concluding submission by Revenue: 

• The Revenue contended that the above chronology of events and facts orchestrated a scheme to portray BB’s presence abroad as “employment” and his presence in India as “visits”.

• It was submitted that in reality, these movements and self-created employment arrangements were orchestrated to give a misleading appearance of being a non-resident.

• Hence, the standard 60-day threshold continued to apply to BB, and the extended 182-day relaxation under Explanation 1(a) / 1(c)—which is meant for Indian citizens working abroad or NRIs visiting India—was not available to him.

II. Revenue’s arguments disregarding BB’s claim of Singapore residency under Article 4(2) of India-Singapore Treaty as per Tie breaker rule

👉🏼 Permanent Home: The Assessee claimed that his Bengaluru house was under construction and uninhabitable, making Singapore his only permanent home. The Revenue countered this by relying on his past asset disclosures showing ownership of high-value residential properties in India, and argued that the Singapore accommodation was only a serviced apartment and therefore temporary.

👉🏼 Centre of Vital Interest: The Assessee contended that, since his spouse and children had relocated to Singapore in March 2019 and were residing with him there, his personal and economic ties were closer to Singapore. The Revenue rejected this, arguing that the Singapore entities drew their value from Indian operations and that BB continued to hold substantial high-value shareholdings and investments in Indian rupees, far exceeding any economic interests in Singapore, thereby indicating that his center of vital interests remained in India.

👉🏼 Habitual Abode: The Revenue argued that BB’s stay in Singapore during FY 2019-20 was merely transitional and exploratory, lacking settled permanency. His residential base in India continued, and his family’s relocation occurred only later, indicating that his habitual abode during the relevant period remained in India.

👉🏼 Nationality: BB, being an Indian national, further reinforced the Revenue’s position that, in the absence of a clear outcome under the earlier tie-breaker tests, his treaty residence would tilt in favor of India.

Conclusion by ITAT: 

The ITAT heavily relied on the arguments of the Revenue and upheld the Ld. Assessing Officers order, wherein BB was regarded as a tax resident of India.  The outcome re-emphasizes that courts are now concerned not merely with the formal genuineness of transactions, but with their intended fiscal effect and underlying substance.

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