Karnataka HC takes Flipkart off hook for tax demand until February 23

Two writ petitions had been filed by Flipkart after notices were issued to Flipkart by the Assistant Commissioner of Income Tax on January 31, for the years 2016-2017 and 2018-2019.

The petitioners argued that the search in question had been illegal, and hence, the subsequent notice too. (File)

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In a February 6 order of the Karnataka High Court, e-commerce company Flipkart obtained an interim stay on a considerable amount of tax payment.

The bench consisting of Justice B Y Shyam Prasad held that Flipkart would be protected from further coercive action until the date of the next hearing on February 24, with counsels K V Aravind and Tarun Gulati appearing on behalf of the Income Tax Department and Flipkart, respectively.

Two writ petitions had been filed by Flipkart after notices were issued to Flipkart by the Assistant Commissioner of Income Tax on January 31, for the years 2016-2017 and 2018-2019.

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The demand had arisen after the tax department disallowed ESOP (Employee Stock Ownership Plan) cross charges for the Rs 4,500 crore in 2016-17 and Rs 180 crore in 2018-19. This had upheld the addition of capitalising discount as a market intangible.

For their part, Flipkart had argued that they were not provided the requisite documents or time window for the demand. They also argued that the issue had already been decided in their favour by the Income Tax Appellate Tribunal, in the year 2015-2016.

The order by Justice Shyam Prasad stated, “….during the appeal period, no coercive action may be taken and as such, coercive measures will not be taken…this assurance shall be in force until the next date of hearing.”

(With inputs from PTI)

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