The Income Tax Department has said a consortium of banks cannot stake any claim to the assets of Kingfisher Airlines until the department’s dues of over Rs 350 crore are settled.

Early this week, the Karnataka High Court had dismissed a plea by the promoters of the airline to restrain the consortium from getting hold of its building in Mumbai.

“It is a settled proposition of law that the amount due to the Government under any statue and, in this case, under the provisions of Income-Tax Act, 1961, will have priority over other debts and as such the dues of Income-tax Department will have to be settled first before the lender consortium of banks can stake any claim to the property,” the IT department said in a statement.

It further said the airline had deducted tax at source from employees’ salaries and other payments for many years but had failed to remit them to the government account.

The company owes the Department over Rs.350 crore of tax dues, it added.

In this connection, the Department has attached all the assets of the company and is in the process of recovering its dues by sale and attachment of assets and properties of the airline.

These include Kingfisher House on the Western Express Highway near the domestic terminal of the Mumbai Airport.

Court directive

The statement said the airline has failed to honour the Karnataka High Court’s directive to pay 50 per cent of the demand and furnish bank guarantee for the balance amount and even the Special Leave Petition has been dismissed by the Supreme Court.

Therefore, “it is advised that any person transacting in the property will be held in violation of the second schedule of Income-Tax Act, 1961, and will be liable for all the consequences,” said a statement from the Chief Commissioner of Income-Tax, Bangalore.

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