Asserting its primary claim, the Income Tax Department has maintained that dues to it will have to be settled first by Kingfisher Airlines, in the wake of a lender consortium of banks laying claim to Kingfisher House in Mumbai to recover part of their loans.

Kingfisher Airlines Limited (KAL) had deducted tax at source from employee’s salary and other payments for many years but failed to remit it to the government account following which it owes over Rs. 350 crore as taxes, the department said.

The IT Department had attached all assets of KAL and is in the process of recovering its dues by sale and attachment of assets and properties of the defaulter company, it said.

Kingfisher House, located near the domestic terminal of the Mumbai Airport, is under attachment under the second schedule of the IT Act, 1961, the department said in a statement.

The IT department’s claim that the amount due to the government will have “priority” over other debts comes two days after the Karnataka High Court rejected KAL’s plea challenging the move by a consortium of banks to take possession of its prime Kingfisher House property to realise part of the debts due to them from the airlines.

The IT Department said 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 IT Act, 1961, will have priority over other debts.

As such, it said, the dues of IT Department will have to be settled first before the lender consortium of banks can stake any claim to the property.

It cautioned that any person transacting in the Kingfisher House property will be held in violation of second schedule of IT Act, 1961 and will be liable for all the consequences.

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