Shares of InterGlobe Aviation surged as much as 2% to ₹2,938 apiece on BSE today after the Income Tax Appellate Tribunal- Delhi (‘ITAT’) granted interim relief to the company in relation to a tax notice.
IndiGo’s parent company InterGlobe Aviation had received ₹1,666 crore tax demand notice from CIT(Commissioner of Income Tax). The CIT-Appeal issued rulings for tax demands amounting to ₹739.68 crore and ₹927.03 crore for the assessment years 2016–17 and 2017–18, respectively.
IndiGo today said the ITAT has provided "temporary relief" to the company. It instructed the tax officer in the jurisdiction not to implement any "forceful actions" for recovering the contested demands until the ITAT resolves the appeals or until six months, whichever occurs first.
As per its previous filing on the matter, the revised taxable income on account of the tax treatment of the incentives that the company received from the manufacturers with the acquisition of the aircraft and engine disallowance of certain expenses had been confirmed without getting an opportunity of personal hearing and adjudication of the matters on merit.
IndiGo operator InterGlobe had reported a net profit of ₹188.9 crore for the July-September quarter of 2023-24 as compared to a net loss of ₹1,583.3 crore in the same quarter during the previous year.
In Q2 FY24, which is considered the seasonally weakest quarter, IndiGo’s profit excluding foreign exchange loss was ₹806 crore. The company’s total revenue for the quarter ended September 2023 stood at ₹15,502.9 crore, an increase of 20.6% over the same period last year. Its passenger ticket revenue was ₹13,069 crore, an increase of 17.6% and ancillary revenue surged 20.05% to ₹1,551 crore.
Post Q2 results, Emkay Global, had cut its FY24 earnings per share estimate for InterGlobe Aviation by 6 per cent, on higher forex loss. It, however, remained constructive on IndiGo, given its strong ASK guidance, dominant position and robust order book, with some relief on fuel rates.
A similar notice was issued to India's biggest passenger vehicle maker, Maruti Suzuki India, in October 2023. The company had received a ₹2,159 crore draft assessment order for the financial year 2019-20 from the Income Tax Department. The company received the notice for FY19-20 wherein certain additions and disallowances amounting to ₹2,159 crore with respect to returned income (the income disclosed by the company in its Income Tax return) were proposed.
Maruti Suzuki had also said it would file its objections before the Dispute Resolution Panel.