The Karnataka High Court granted interim relief to the Flipkart by hindering the coercive action from the Income Tax Department and they assured the same till next hearing i.e. February 24, 2023.
Flipkart recently filed two writ petitions contesting the demand notices for the assessment years 2016–17 and 2018–19 that were sent on January 31, 2023 by the Assistant Commissioner of Income Tax of Rs. 11,000 crores. However the Income Tax department has assured that no coercive measures will be taken against the Flipkart India Private Limited.
The issue arose when the department upheld capitalising discounts as marketing intangibles while disallowing ESOP cross charges of 4,500 crore for 2016–17 and 180 crore for 2018–19. The E-commerce company is dissatisfied that only four days have been given for depositing the demand, and that no fair amount of time has been given.
On behalf of “Flipkart”, Tarun Gulati appeared and asserted that the documents providing the foundation of the conclusions were not provided, and the appellate decisions were issued in flagrant breach of the principles of natural justice. Additionally, a fair window of time to deposit the required tax was not provided.
“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,” recorded by the Court in its interim order.
K V Aravind, the department lawyer, was asked to acknowledge the notice. The petitioner’s complaint that notices as per Annexure-B are issued in both of these petitions before the period provided to prefer appeal against the order dated 31.01.2023 caused the court to group the two applications filed by Flipkart together.
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