ITAT allows Business Loss including an Amount paid as Managerial Remuneration as it is included in Business Expenses [Read Order]

The Delhi Bench of  Income Tax Appellate Tribunal (ITAT) allowed the  business loss including an amount paid as managerial remuneration.

The assessee, M/s. Universal Buildrise Private Limited is a Private Limited Company and filed its return of income declaring loss and paid taxes on book profit under MAT provisions. The case was selected for scrutiny and statutory notice under section 143(2) was issued. During the course of assessment proceedings, the AO noted that assessee company claimed to be engaged in the business of supplying books. He noted that during the financial year 2016-17, the name of the assessee company has been changed from M/s Universal Book Distributors Private Limited to M/s Universal Buildrise Private Limited. The source of income of the assessee company was rental income, but the assessee also claimed to be engaged in the trading of the book etc.

The AO held that the assessee company had not carried out any business activities and the payments made to its Director as remuneration and other expenses are not business expenses. The business loss claimed was just to avoid the tax on income from house property. He, therefore, disallowed the business loss of Rs.44,55,096/- and brought to tax the rental income from house property at Rs.36,28,298/- after allowing the deduction under section 24 of the Income Tax Act, 1961.

The Assessee at the outset submitted that during the A.Ys. 2012-2013 and 2014-2015, the Tribunal has decided the issue in favour of the assessee and had allowed the managerial remuneration as business expenses.

The coram of Accountant Member, R.K.Panda held that the assessee is entitled to the business loss which includes an amount of Rs.39 lakhs paid as managerial remuneration.

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