Kingfisher assets attached on tax default

mangaloretoday.com

Bangalore, Dec 15, 2013 (DHNS): The Income Tax department has attached all assets of cash-strapped Kingfisher Airlines for failing to remit taxes amounting to Rs.350 crore, a senior official said Sunday.

"We have attached all assets of Kingfisher Airlines and are in the process of recovering its dues by sale and attachment of properties of the defaulter company," IT official Lokesha said in a statement here.

The defunct airline of business tycoon Vijay Mallya had deducted tax at source from its employees’ salaries and other payments for assessment years 2010-11 and 2011-12, but failed to remit the amount to the government account.

 

"Kingfisher House at Western Express Highway near the Mumbai domestic airport has been attached under the second schedule of the Income Tax Act, 1961," Lokesha said.

The Income Tax department also charged the airline with failing to honour the Karnataka High Court directive Dec 5, 2012, to pay 50 percent of the demand and furnish bank guarantee for the balance amount within six weeks.

"The Supreme Court had recently dismissed the airline’s special leave petition (filed Jan 16, 2013) against the high court directive," Lokesha said.

The tax department clarification came in the wake of reports in a section of the media that a lender consortium of banks led by state-run State Bank of India was laying claim to the airline’s properties.

"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 dues of IT department will have to be settled first before the lender consortium can stake any claim to the property," Lokesha said.

Six other creditors also filed petitions in the high court earlier this year to wind up the defunct airline for failing to pay their dues in spite of several reminders.

The six creditors are IAE International Aero Ltd., RRPF Engine Leasing, Rolls-Royce & Partners Finance, Avions de Transport Regional GIE, and PNB Paribas, which supplied aircraft, components and funds to the crisis-ridden airline.

The grounded airline reported a net loss of Rs.4,301 crore for fiscal year 2012-13 and the Director General of Civil Aviation (DGCA) suspended its permit in October 2012 on safety concerns and indefinite strike by its employees.

With an accumulated losses of Rs.16,023 crore and a negative net worth of Rs.12,919.81 crore, the airline has a debt of Rs.8,000 crore from a consortium of 14 banks, aircraft leasing firms,airport operators, state-run oil marketing firms and other vendors.