The Karnataka High Court has granted interim stay to Flipkart India on demand of over ₹1,100 crore . for the 2016-17 and 2018-19
The court also granted Flipkart India, protection against coercive measures until February 24, 2023, the next date of hearing. . The company had filed writ petitions against demand notices issued by the Commissioner of Income-Tax (Appeals) after upholding addition on account of capitalising discount as marketing intangibles and disallowing ESOP cross charges amounting to about ₹.4,500 crore . and ₹180 crore , respectively for the two assessment years.
Flipkart India submitted that the issue of capitalisation of marketing intangibles was decided in its favour by the Income Tax Appellate Tribunal (ITAT) Bangalore for 2015-16. It also submitted that the allowability of ESOP cross charges was covered in its favour by the coordinate Bench ruling in Biocon case and also by Madras High Court and Delhi High Court rulings in PVP Ventures and NDTV cases, respectively.
Flipkart’s arguments
The e-commerce company argued that “the appellate orders have been passed in gross violation of principles of natural justice as the documents forming basis of findings were not provided to Flipkart for rebuttal.” The e-commerce firm also underscored violation of judicial discipline and consistency
Flipkart said its grievance was that no reasonable time is provided to deposit the demand The company, had urged the court that no coercive measures be taken until the expiry of such limitation period.