Kingfisher Airlines loses TDS case

In a major setback to Vijay Mallya-led Kingfisher Airlines, the Karnataka High Court, on Tuesday, upheld the 2011 assessment order of the Income-Tax Department, asking the company to remit around Rs.372 crore tax deducted at source (TDS) from the salaries of its employees and other payments.

The I-T Department had, in November-December, 2011, had demanded around Rs.302 crore towards TDS and Rs.70 crore as interests for the assessment years 2010-11, 2011-12, and 2012-13. The demand was raised following searches conducted on the premises of the airlines.

With the non-remittance of the major portion of the TDS amount for years, the demand has now grown to Rs.500.86 crore along with interests. And, the total TDS amount now due to the government is estimated at Rs.355.39 crore as the Department had received Rs.145.47 crore by way of attachment of the company’s assets and also some amount remitted by the company.

A Division Bench, comprising Justice N. Kumar and Justice B. Manohar, passed the order while setting aside the May 25, 2012, order of the I-T Appellate Tribunal, which had directed the department to make a fresh assessment while pointing out that the assessment orders were passed “without providing the company a reasonable and sufficient opportunity of being heard.”

However, on perusing the records, the court said that the company, neither before the assessing officer nor before the appellate authority, had not claimed that it was not provided with sufficient opportunity but such a plea was made only before the tribunal.

The court also pointed out that the company, after admitting the liabilities on receipt of notices from the assessing officer, had sought more time to make payments for the reason that the company was facing serious financial difficulties. The court also noticed that the company’s head, Vijay Mallya, himself had written letters to the department in this regard. “At no point the liability was in dispute…,” the Bench observed while declaring the assessment as ‘valid’ one.

Also, the court noted that the company did not co-operate with the assessing officer as it failed to submit to the department or the appellate authorities or to the court the statements on number of employees, their salaries, amount of TDS, total TDS and the like even after many reminders from the department.

Meanwhile, the court gave four months to the company to submit necessary documents as sought by the assessing officer while asking the department to adjust the payments, already received, towards the total demand.