The Income Tax Appellate Tribunal ( ITAT ), Hyderabad bench has deleted an addition by the National Faceless Assessment Centre ( NFAC ) by holding that the “Company” cannot have salary income under the provisions of the Income Tax Act, 1961.
The Assessee, Ducere Technologies Private Limited, is a private company filed return of income for the assessment year 2020-21. However, the Centralised Processing Centre (CPC), Income Tax Department raised demand for Rs. 2,55,650/-.
The assesseecontended that the CPC failed to consider the brought forward losses from assessment year 2013-14 to2019-20 resulting in raising demand to Rs. 2,55,650/-. The assessee further contended that though the said expenses were not paid before the filing of return of income, the said fact was disclosed in the tax audit report.
On appeal, the CIT(A) observed that in view of provisions under section 71(2A) of the Income Tax Act, 1961, the assessee shall not be entitled to have the losses set-off against the income assessed under the head ‘salaries’.
Shri K. Narasimha Chary, Judicial Member observed that “It is therefore clear that the assessee is not disputing the additions made but only prays for verification of the brought forward losses for the purpose of setting-off the additions now made against such losses. Since the assessee is a company as is established by the 143(1) intimation, question of assessing its income under the head ‘salary’ does not arise. Impugned order is, therefore, liable to be set aside. The aspect of availability of brought forward losses needs verification at the end of the2019-20 resulting in raising demand to Rs. 2,55,650/-.”
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