Mumbai International Airport Ltd (MIAL), now controlled by the Adani Group, which operates the Chhatrapati Shivaji Maharaj International Airport (CSMIA) in Mumbai, finds itself embroiled in a significant tax dispute with the Indian tax authorities, facing a demand of Rs 873 crore in additional taxes for the financial year 2019-20.
The reassessment proceedings, initiated by the tax department, are based on investigation reports from the Directorate General of GST Intelligence and the Central Bureau of Investigation (CBI), alleging suspicious transactions that predate Adani's takeover of the airport, disclosures made by the parent Adani Enterprises showed.
The core of the dispute revolves around transactions from FY20, a period when the GVK Group was the majority shareholder in MIAL. Adani Group officially acquired control of the airport in July 2021. However, legal experts point out that as the proceedings are against MIAL, the liability falls on the current promoters.
According to a disclosure in a draft debt offer document filed by Adani Enterprises, the tax authorities initiated reassessment proceedings on March 30, 2025, under Section 147 of the Income-tax Act, 1961.
Section 147 of the I-T Act allows the Assessing Officer to reopen a previously completed assessment if they have reason to believe that income chargeable to tax has escaped assessment. This power can be exercised if certain conditions are met, such as the income escaping assessment being above a specified threshold.
Emails sent to MIAL, Adani Airports, Adani Group and the tax department remained unanswered.
"Our Subsidiary, Mumbai International Airport Limited ("MIAL") filed return of income assessment year 2019-20 declaring total income as nil and declaring a profit of Rs 134.07 crores under section 115JB of the Income-tax Act, 1961 for ("Act"). Based on investigation reports from the Directorate General of GST Intelligence and the CBI, the assessing officer ("AO"), on March 30, 2025, initiated reassessment proceedings under section 147 of the Act. These reports alleged that MIAL engaged in transactions worth Rs 602.46 crores with 13 suspicious entities for bogus capital work contracts, without actual execution of work, and siphoning of funds," Adani Enterprises said in a draft debt offer document filed with market regulator last month.
MIAL has already submitted a representation to the Central Board of Direct Taxes (CBDT) seeking relief. In a temporary reprieve, the Principal Commissioner of Income Tax, Mumbai, has put the demand notices on hold until October 25, 2025. The matter will now be heard by the Commissioner of Income Tax in the coming months.
MIAL’s defence: Strategic subsidiary creation amid acquisition
People privy to the development said MIAL’s defence centres around creation of subsidiary companies in FY20 as part of the preparations for the acquisition of MIAL from the GVK Group, ACSA Global Ltd, and Bid Services Division (Mauritius) Ltd (Bidvest).
Adani Airport Holdings (AAHL) currently owns 74 percent stake in MIAL while the balance 26 percent stake is owned by Airports Authority of India. Earlier, GVK held 51 percent stake while others including ASCA Global and Bid Services Division held 23 percent stake.
"Separate subsidiary companies were created in order to not disrupt the operations at CSMIA(Mumbai) airport during the acquisition process and impact the livelihood of employees. Companies were created under four categories namely — airport security, power supply, logistics, and ground handling — to ensure a smooth acquisition," said a person with direct knowledge of the matter.
"The former operators of MIAL airport were facing bankruptcy and legal problems when the acquisition of MIAL by the Adani Group was being completed, and as part of the acquisition process to take over the day-to-day management of CSMIA in a phased manner the Adani Group had awarded work contracts to its subsidiaries to ensure no disruption of services at CSMIA," said a second source told Moneycontrol.
"Facing a massive debt, the GVK group was further hit by the pandemic, and found a quick deal from the Adani Group as a way out. But at the same time, it was also facing action from CBI and ED over financial irregularities," the second person added.
Broader tax disagreements over various airport fees
Beyond the FY20 reassessment, MIAL and the tax department are also locked in disagreements over the tax treatment of various fees collected by the airport. MIAL has received two notices for FY21 and FY24 concerning such charges, according to company disclosures.
For FY24, the tax department raised questions over the treatment of Rs 438 crore received as development fee and Rs 94 crore received as metro development fee as revenue receipts amongst others, leading to a demand of Rs 464 crore.
"Pursuant to the Assessment Order, a notice of demand under section 156 of the Act was issued on March 27, 2025, raising a demand of Rs 464.06 crores. MIAL has filed a stay of demand application on May 2, 2025, against the Assessment Order to Principal CIT-2, Mumbai. The Principal CIT-2, Mumbai, vide an order dated May 23, 2025, stayed the demand till October 31, 2025 or disposal of appeal, whichever is earlier, conditional upon refund adjustment," the offer document said.
Similar tax demands amounting to Rs 276 crore were also raised for FY22, which included disagreements over other income heads such as passenger service fees and retrenchment compensation, as per the disclosures.
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