Income Tax department takes Flipkart to high court following ITAT ruling

By

Isabelle Crossley

Published
Feb 20, 2020

The Income Tax Department has taken US-based Walmart-owned e-commerce giant Flipkart to the high court to address its demand for Rs 110 crore ($16.5 million) in what it sees as unpaid taxes, after a ruling by the Income Tax Appellate Tribunal.

 
The Income Tax Department has argued that Flipkart owes Rs 110 crore in unpaid taxes. However, Flipkart has argued that it does not. The confusion relates to whether discounts offered by retailers should be classed as capital expenditure or revenue expenditure and thus, if they can be taxed.
 
The Income Tax Department has decided to take Flipkart to the high court because the Income Tax Appellate Tribunal, which first heard the case in 2018, ruled that Flipkart could treat its marketing expenses and discounts as a loss. The Income Tax Department, contesting this, hopes the upcoming high court hearing will be in its favour, TNN reported.

The case pertains to Flipkart’s earnings in the 2016 financial year. Flipkart has stated that it cannot pay tax of “fictional income” but the Income Tax Department is keen to recover the funds. Flipkart was instructed to appear at the high court last month after the Income Tax Department filed a petition, viewed by the Times of India.