ITAT Has Permitted Flipkart India’s Appeal About…

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Bangalore Income Tax Appellate Tribunal (ITAT) allows Flipkart appeal to allow deductions towards ESOP expenditure. As per the Division Bench of Bengaluru ITAT comprising George George K, Judicial Member, and Padmavathy S, Accountant Member, Flipkart filed a loss return of Rs 139.61 crore against which it was  subordinated to the addition of Rs1708.39 crore on account of valuation of marketing intangibles, and Rs15.80 crore on account of ESOP charges. The company filed a loss return of ₹139.61 crore, against which it was  subordinated to the addition on account of the valuation of marketing intangibles and ₹15.80 crore on account of ESOP charges.  

Division Bench of Bangalore ITAT comprising Shri George George K, Judicial Member, and Smt. Padmavathy S, Accountant Member ruled, “With regard to profit’s appeal on marketing intangibles, ITAT relies on Flipkart’s case for AY 2015-16 wherein it was held that the profit periphery forthcoming by the company can not be held to be an incurred expenditure in creating impalpable or goodwill. Therefore, ITAT finds no reason to intrude with the manager of income-  duty’s order and dismisses the profit’s appeal.”  Flipkart filed a loss return of INR 139.61 Cr. against which it was subordinated to the addition of INR1708.39 Cr on account of valuation of marketing intangibles and INR15.80 Cr on account of ESOP charges.  

Last month, the Karnataka High Court reportedly granted interim relief to Flipkart India on the Commissioner of Income Tax (Appeals) demand of over INR 1,100 Cr for assessment times 2016-17 and 2018-19.   Flipkart argued that the ITAT Bengaluru had  formally decided in favour of the company capitalising marketing intangibles for assessment time 2015-16, which was the main bone of contention. The capital expenditure(capex) versus profit  expenditure has always been an argument between ecommerce companies and the Income duty department in India.