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Kingfisher Airlines blames crisis on income tax department for seizing its bank accounts

In a statement to clarifying the on-going crisis, Kingfisher Airlines has virtually blamed the Income Tax department of India for seizing the airline’s bank accounts. Since the airline has never made a profit since commencement, the airline would not be past due on income tax. What it could be past due on, is, Tax Deduction at Source (TDS).

Tax Information Network

Entities (both corporate and non-corporate deductors) making payments (specified under Income Tax Act) to third parties (deductees) are required to deduct tax at source (Tax Deducted at Source -TDS) from these payments and deposit the same at any of the designated branches of banks authorised to collect taxes on behalf of Government of India. They should also furnish TDS returns containing details of deductee(s) and challan details relating to deposit of tax to ITD.

Failure to remit these taxes collected on behalf of the government can invite rigourous imprisonment of three to seven years.

In the spirit of “no-spin” (yes I like Bill O’Rielly), we reproduce the statement without any edits. Some clarifications are marked with [square brackets].

Mumbai, February 20, 2012
Kingfisher Airlines Ltd. would like to reiterate and clarify as follows:

  1. The prime reason for the current disruption in our flight schedules is the sudden attachment of our bank accounts by the IT department. This has severely affected our ability to make operational payments leading to the present curtailment. The revised schedule has been updated in the system.
  2. We are in dialogue with the tax authorities to agree a payment plan and get the bank accounts unfrozen at the earliest. We are appealing to them to see reason that inconvenience to the travelling public is not in anybody’s interests.
  3. Employee salaries can be paid and the grounded aircraft can be recovered quicker once the bank accounts are unfrozen and the schedule restored on priority.
  4. About 15% of our flights operating consistently for the past 3 months have been cancelled and we have done and are doing our best to inform guests in advance of cancellations and clubbing and to re-book them on other carriers.
  5. If the guests so desire, we are offering them a full refund.
  6. Our teams are in close touch with our travel trade partners to keep them abreast of the disruptions so that they too can, in turn, ensure that guests contacting them / booking via them are kept updated of any changes.
  7. We’ve been in touch with the DGCA to keep them informed of the disruptions.
  8. We will appear before the DGCA tomorrow and submit all details they want and also a plan to restore the full schedule.
  9. We would like to reassure our valued guests that there are absolutely no safety issues with the aircraft that are operating.
  10. We have had a constructive meeting with our bank consortium last week.
  11. As stated earlier, we have not approached the Government of India for any “bail out”.
  12. We understand from media that certain positive decisions were taken at a recent GOM [Group Of Ministers] meeting which will benefit the industry and also Kingfisher Airlines. [Referring to approval of 49% FDI by foreign airlines and direct import of aviation fuel.]
  13. We have adequate numbers of flight crew and cabin crew to operate our schedule of flights.

Kingfisher Airlines deeply regrets the inconvenience caused to its valued guests on account of the current disruptions.

Credit to the airline, the statement is a true, even if damning, recitation of the situation; but to blame the tax department when you have defaulted ?!?!?! takes guts, even if they are completely darned crazy.

Along with our regular readers, it will be great to hear from regular Kingfisher passengers and members of King Club their views on the latest developments.

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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