IndiGo shares fall on Rs 1,666-crore tax demand

In the previous session, IndiGo shares fell nearly 1 percent to close at Rs 2,602 on the National Stock Exchange

Shares of Interglobe Aviation, which operates IndiGo airline, opened marginally lower on November 23 as the Commissioner of Income Tax (CIT) Appeals has confirmed tax demands totalling around Rs 1,666 crore.

The CIT-Appeal issued orders for Rs 739.68 crore and Rs 927.03 crore tax demand for the assessment years 2016–17 and 2017–18, respectively.

IndiGo has said it will contest the orders and pursue appropriate legal remedies. India’s biggest airline by market share has claimed it was not granted an opportunity for a personal hearing by the commissioner and the matter was not adjudicated on merit.

At 9:17 am, IndiGo shares were trading half a percent lower at Rs 2,592.40 on the National Stock Exchange (NSE). The stock has gained 27 percent this year, outperforming the benchmark Nifty 50, which has risen over 8 percent during the time.

Also Read | Income-tax commissioner confirms Rs 1,666-crore tax demand on IndiGo; airline to contest order

This is the second time CIT-Appeals has confirmed tax demand on IndiGo. Earlier in 2015, the quasi-judicial appellate authority had asked the Central Board of Direct Taxes (CBDT) to look at treating discounts received by Indian airlines on the purchase of aircraft as commission while computing their taxable income.

Based on this, the CIT issued notices to the carrier, asking why its taxable income should not be increased by more than Rs 400 crore for the assessment years 2008-11 to include the discounts it received?

The air carrier had presented the discounts as capital receipts, which are exempted from income tax. CIT, however, rejected the plea.

"CIT-Appeals has now passed respective orders wherein the revision to the taxable income on account of tax treatment of certain incentives received by the company from aircraft and engine manufacturers and disallowance of certain expenses has been confirmed without granting an opportunity of personal hearing and adjudicating the matter on merits”, the airline said.

The company believed, based on legal advice, that the views taken by authority were not sustainable, it said.

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