New Delhi, Jan. 16 -- The Supreme Court on Thursday ruled that capital gains arising from American investment firm Tiger Global's $1.6-billion stake sale in Flipkart to Walmart in 2018 are taxable in India, handing a major victory to the Union government in an important judgment that is set to shape the future of cross-border investments and treaty-based tax planning.

Setting aside a 2024 Delhi High Court ruling that had favoured Tiger Global, a bench of justices JB Pardiwala and R Mahadevan held that the transaction was structured as an "impermissible tax avoidance arrangement" and that the firm's Mauritius-based entities could not claim capital gains tax exemption under the India-Mauritius Double Taxation Avoidance Agreement (DTAA).

T...