I-T is the new suitor for Kingfisher House

Even as Kingfisher Airlines wrangles with its lenders over its Kingfisher House property in Mumbai, the Income Tax department has staked the first claim to the property based on its claim to dues of Rs 350 crore (Rs 3.5 billion) from the company.

The I-T department has issued an advertisement in newspapers saying any person transacting in the property would be held in violation of the second schedule of the Income-tax Act, 1961.

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The I-T department has repeated its claim after the Karnataka high court rejected a plea from the airline seeking to prevent its lenders from seizing the property.

SBICAP Trustee Company had last month moved to seize the property to recover some of its dues to the defaulting airline. 

The Vijay Mallya-led airline, staggering under dues of Rs 7,000 crore (Rs 70 billion), had ceased operations in October last year.

Lenders have taken steps to seize Mallya’s properties, including the Kingfisher Villa in Goa, pledged as collateral to recover some of their dues. 

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The I-T department had also started proceedings against the airline in a court for economic offences earlier this year. 

The department claims the airline had deducted tax at source from its employees’ salaries and other payments for many years but failed to remit that to the government account. 

“The income-tax department has attached all assets of the company and is in the process of recovering its dues by sale & attachment of assets & properties of the defaulter company,” a statement from the I-T department said.

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“Kingfisher House at Western Express Highway near the domestic terminal of the Mumbai airport is under attachment under the second schedule of the Income-tax Act, 1961,” it added.

The provision under the Act gives them priority over other debtors.

“As such the dues of the income-tax department will have to be settled first before the lender consortium of banks can stake any claim to the property,” the statement said.

The I-T department also alleged the company had failed to honour a high court directive ‘to pay 50 per cent of the demand and furnish bank guarantee for the remaining amount’.