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 ₹372 crore tax deducted at source (TDS) from the salaries of its employees and the payments made towards its expenses.

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

With the non-remittance of a major portion of the TDS amount for years, the amount reached ₹500.86 crore, along with interest. The total TDS amount now due to the Government from the company is estimated at ₹355.39 crore as the Department had received ₹145.47 crore, by way of attachment of the carrier’s assets and also some amount remitted by it.

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”.

Ample opportunity

However, on perusing the records, the Court said the airline, neither before the assessing officer nor before the appellate authority, had 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 Kingfisher, after admitting the liabilities on receipt of notices from the assessing officer, had sought time to make payments for the reason that the company was facing serious financial difficulties. The Court also noticed that the company’s head Mallya himself had written letters to the Department in this regard.

“At no point, liability was in dispute…,” the Bench observed while holding the assessment as valid. Also, the Court noted that the company did not cooperate with the assessing officer as it failed to submit to the I-T Department or the appellate authorities the statements on the number of employees, their salaries, amount of TDS, etc even after many reminders from the Department.

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

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