Flipkart Receives Rs 1,700 Crore Income Tax Relief
Income foregone cannot be assumed as expenditure to create goodwill, says the ITAT in Flipkart's case.
Hemanth Kumar
In a major relief for the e-commerce platform, the Bengaluru bench of the Income Tax Appellate Tribunal allowed Flipkart India Pvt.’s appeal against a Rs 1,700 crore tax demand made by the revenue authority for assessment year 2017–2018.
At the heart of the issue were two demands: disallowance of expenditure incurred on the issue of the Employee Stock Option Scheme and addition of money spent on the creation of market intangibles. While Flipkart reported a loss of Rs 139 crore for the year, these additions brought the tax liability of the company to Rs 1,723 crore.
The Commissioner of Income Tax (Appeal), while allowing the disallowance of ESOP charges, directed the department to delete the addition made on account of the creation of market intangibles.
Consequently, both Flipkart and the revenue department filed appeals with the appellate authority.
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