The Bombay High Court has quashed the reassessment proceedings against Jetair Pvt Ltd

The Bombay High Court has quashed the reassessment proceedings against Jetair Pvt Ltd

The Bombay High Court has quashed the reassessment proceedings against Jetair Pvt Ltd, a group entity of Jet Airways (India) Ltd, by rejecting the revenue department's contentions that payment of commission to Jetair, who is a sales agent of Jet Airways, at a rate lower than what it charges other unrelated airlines on domestic and international ticket sales, was a colorable device used to evade tax. Because Jet Airways is a loss-making enterprise, the revenue department argued that paying commission at a lower rate reduced the group's overall tax liability, benefiting the entire group. The Court hold that charging a lower commission is a business decision and cannot be called a colorable device/mechanism and noted that the fact that Jet India Pvt Ltd is a loss-making company is not a valid criterion to determine income escapement.




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