Tax demand case: Flipkart gets relief till February 24

The company had filed two writ petitions challenging the demand notices issued on January 31, 2023 for the assessment years FY17 and FY19

The Income Tax Department has assured the High Court of Karnataka that no coercive action will be taken against Flipkart India Private Limited on the demand notices issued by the Assistant Commissioner of Income Tax for Rs 1,100 crore.

The company had filed two writ petitions challenging the demand notices issued on January 31, 2023 for the assessment years 2016-17 and 2018-19.

Justice BM Shyam Prasad, in his interim order on February 6, 2023 recorded the Department’s assurance against coercive action till the next date of hearing on February 24. “The submission on behalf of the respondent is that there cannot be any prohibition in law against issuance of notice, but during the appeal period, no coercive measure may be taken and as such, coercive measures will not be taken,” the court recorded in its interim order.

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“This assurance shall be in force until the next date of hearing, and the office is directed to re-list this petition on 24.02.2023,” the HC said.

The department had disallowed ESOP cross charges amounting to Rs 4,500 crore for 2016-17 and Rs 180 crore for 2018-19. It had thus upheld the addition of capitalising discount as marketing intangibles.

Senior counsel Tarun Gulati appeared for Flipkart. The standing counsel for the Department, K V Aravind was called upon to accept the notice. The court tagged the two petitions filed by Flipkart together “in the light of the petitioner’s grievance that notices as per Annexure-B in both these petitions are issued within the time allowed to prefer appeal against the order dated 31.01.2023.”