Taxation Law

Blackstone Capital Partners (Singapore) VI FDI Three Pte. Ltd. v. Assistant Commissioner of Income Tax

2023/DHC/000634; (2023) 452 ITR 111 (Del); 146 taxmann.com 569

Facts

Blackstone Capital Partners (Singapore) VI FDI Three Pte. Ltd. was incorporated in Singapore and held a Singapore tax residency certificate.
It acquired shares of Agile Electric Sub Assembly Private Ltd., an Indian company, in two tranches during 2013.
It sold all those shares to Igarashi Electric Works Ltd. and other purchasers on 30 July 2015.
In its return for assessment year 2016–17, Blackstone claimed that the capital gain was taxable only in Singapore under Article 13(4) of the India–Singapore DTAA.
The Revenue reopened the assessment under sections 147 and 148.
It alleged that:
the funds had ultimately been raised by the US-based Blackstone group;
management and control effectively came from the United States;
the Singapore company was not the real or beneficial owner;
it was not entitled to treaty protection.
Blackstone challenged the reassessment proceedings before the Delhi High Court.

Whether the Indian Revenue could go behind a valid Singapore TRC to reconsider:
residence;
treaty eligibility;
legal ownership.
Whether Article 13 required Blackstone to establish beneficial ownership of the capital gain.
Whether the Singapore entity was a shell or conduit disqualified under the treaty’s Limitation of Benefits clause.
Whether valid reasons existed to reopen the assessment.

Under section 90(4), a non-resident claiming treaty benefits must produce a TRC issued by the relevant foreign government.
The Delhi High Court treated the TRC as sufficient evidence of treaty residence under the government policy and authorities then governing the issue.
Courts cannot insert a beneficial-ownership requirement into a treaty article that does not contain one.
Under the India–Singapore DTAA:
beneficial ownership was expressly used for dividends, interest and royalties;
the relevant capital-gains article did not use that expression.
Treaty anti-abuse must be tested through the negotiated Limitation of Benefits clause.
Reassessment requires legally relevant reasons showing income chargeable to tax has escaped assessment.
Recorded reasons cannot later be supplemented through new arguments.

Blackstone possessed a TRC issued by the Inland Revenue Authority of Singapore.
The Revenue produced no material showing that it was legally resident in the United States.
Its board was based in Singapore, and the alleged US controller was not shown to be a member of that board.
The Court held that the source of investment funds and professional group influence did not, without more, displace the company’s legal residence and ownership.
Article 13 allocated taxing rights according to the residence and legal ownership of the transferor.
Unlike the articles dealing with dividend, interest and royalty, it did not require proof of beneficial ownership.
The Court therefore refused to introduce that additional test judicially.
The treaty contained an objective LOB test for identifying a shell or conduit.
Blackstone produced:
audited financial statements;
a chartered accountant’s certificate;
evidence that it had incurred the required minimum operational expenditure in Singapore.
The Assessing Officer had not disputed this evidence in the recorded reasons.
The Revenue could not introduce new LOB objections only during the writ proceedings.
The capital-gains claim was an allocation of treaty taxing rights to Singapore, not an ordinary domestic deduction or exemption.
The Court concluded that no legally sustainable basis existed to allege escaped Indian income.

The Delhi High Court quashed:
the section 148 notice;
the recorded reasons;
the order rejecting Blackstone’s objections;
the consequential draft assessment order.
It held that:
the Revenue could not go behind the valid TRC;
Article 13 did not contain a beneficial-ownership test;
Blackstone satisfied the objective LOB requirement;
the capital gain was not liable to tax in India under the treaty.
Current-status qualification: On 12 January 2024, the Supreme Court granted leave and stayed the Delhi High Court judgment while restraining recovery from Blackstone. Official Supreme Court cause lists show the appeal as Civil Appeal No. 505 of 2024, and it remained listed in late 2025. I found no final Supreme Court merits judgment disposing of that appeal as of 16 July 2026. The High Court ruling should therefore be studied as the prescribed 2023 authority, but not treated as an unstayed final statement of current law.