In a setback to Vijay Mallya-owned Kingfisher Airlines, the Karnataka High Court on Wednesday directed the company to deposit 50 per cent of the Rs 371 crore that it is required to remit to the Income-Tax Department as tax deducted at source (TDS) from its employees and payments made towards expenses.
The High Court has also asked the company to furnish bank guarantee for the remaining amount due to the Department, within six weeks.
The airline’s contention is that the amount due is much less than the demand made by the IT Department. The court has however, said that the TDS already paid by the company would be adjusted in computing the amount to be deposited. A Division Bench comprising Justice D.V. Shylendra Kumar and Justice B. Manohar passed the interim order on the separate appeals filed by the Department and the company challenging the May 25, 2012 order of the Income Tax Appellate Tribunal.
The Tribunal, while allowing an appeal by the company against the demand to pay TDS amount, had said that the Department had issued notices without providing the company a reasonable and sufficient opportunity of being heard. The Tribunal had remanded the matter back to the Assessing Officer.
The Tribunal also had said that it was not clear whether TDS was only in connection with the salary or also about other payment of expenses. On appeals filed by the Department, a Division Bench of the High Court in June this year had passed the interim order staying the operation of Tribunal’s order.
Subsequently, the company too filed appeals against the order of the Tribunal and another Division Bench granted stay in favour of the company. The contentious issue dates back to December last, when the Department, in December 2011, had demanded payment of about Rs.372 crore as TDS from the company for the assessment years 2010-11, 2011-12, and 2012-13, following analysis of records during search conducted in company’s premises in Bangalore and other places.
Later, the Department had attached bank accounts of company for a certain period of time during February 2012 and had recovered some part of the amount, and subsequently the company itself had made some payments.
The Department’s claim has been that the company had illegally withheld the revenue payable to the Government even after deducting the said amount from various sources, including by way of TDS.