As per public information, in proposed deal, shares of holding company Flipkart Singapore (i.e. a foreign company) would be transferred to Walmart. Generally, any gain arising from sale of shares of a foreign company is not liable to income tax in India. However, pursuant to Vodafone controversy, ‘indirect transfer’ provisions were introduced under domestic tax laws, providing that gains from transfer of shares of foreign company could be taxed in India, if such shares derive its value substantially from assets situated in India, which would be apparently satisfied in Flipkart’s case, since entire business of Flipkart is situated in India.

The income tax department will now have to refund the Rs 55 crore tax that was deposited by Flipkart and revoke the bank guarantee pursuant to the Feb. 6 order of the ITAT. The tax department, while raising the demand, had treated the Rs 796 crore loss incurred by Flipkart for the assessment year 2015-16 as capital expenditure. Rakesh Nangia, Managing Partner shares his views on aforementioned story for PTI. (News flashed by PTI has been picked up 178 other news publication like Economic Times, Times of India, Business Standard, Bloombergqunit, Outlook,India today etc.)

In a major relief to e-commerce retailer Flipkart, the Income Tax Appellate Tribunal (ITAT) is learnt to have rejected the I-T Department’s tax demand of ₹110 crore from the company, which had claimed tax deductions on its marketing and discount expenses by classifying them as revenue expenditure. Rakesh Nangia, Managing Partner shares his views on aforementioned story for following publications:

1. Economic Times- Front page/First story
2. Business Standard- Front page/First story-Standalone
3. Livemint- Front page/First story-Standalone
4. Financial Express- Front page/First story-Standalone