Jet gets SC notice on tax dues of R150 cr

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: May 4 2013, 06:40am hrs
The Supreme Court on Friday sought an explanation from the Naresh Goyal-led Jet Airways as to why it should not be asked to pay tax to the tune of R152.49 crore, as alleged by the income tax department, for 2002-03.

A bench headed by Justice RM Lodha issued notice to Jet Airways on an appeal filed by the department wanting to recover tax dues from the private carrier.

Challenging the Bombay High Court judgment that dismissed its appeal, the department said that the HC erred in deleting the addition made by it on account of proportionate aircraft redelivery charge, heavy maintenance expenses, etc.

Besides, the HC erred in directing the assessing officer (AO) to treat interest income on fixed deposit as profit from business and profession rather than income from other sources, as held by the officer, additional solicitor general Gaurav Banerjee argued.

The HC erred in deleting the addition made by the AO on account of provision for gratuity while computing book profit, the appeal stated.

Jet Airways, which operates its fleet across the country, had filed its income tax returns declaring nil income in November 2003. While its return was selected for scrutiny, the AO found that during 2005, the assessee had declared operating revenue from passenger, excess baggage, cargo and other revenues of R2,526.28 crore in the preceding year.

However, during 2005 the international transaction reported by Jet Airways related to guarantee fees of R20.20 crore paid to export credit agency US Exim Corporation, the department said.

The AO had disallowed around R428 crore on account of maintenance of aircraft, its depreciation and other expenses. He was of the view that the expenses towards spares/obsolescence was an estimated liability which was contingent in nature.

This led the assessee to approach the Commissioner of Income tax and the Income Tax Appellate Tribunal which ruled in favour of the firm in 2006 and 2010, respectively. Even the Bombay High Court endorsed the tribunals decision.

Jet Airways has been in news recently as it signed a deal with Gulf carrier Etihad last month under which the premier Indian carrier agreed to sell 27.26 million shares (24% stake) in a preferential offer to the latter at R754.74 a piece.

Jet Airways is the first Indian carrier to benefit from a September policy change by the government that allowed foreign airlines to buy as much as 49% of domestic ones.