ITAT: Income of Company Can’t Be Evaluated Under Salary Head

The income of the assessee could not be assessed under the heading salary, as the taxpayer is a company, the Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) ruled.

The bench of K. Narasimha Chary (a judicial member) restored the problem to the Assessing Officer’s file in order to confirm the existence of brought-forward losses for the purpose of offsetting current year revenue against losses.

The taxpayer held as a private company that furnished the income tax return for the AY 2020-21. But the Centralized Processing Centre (CPC) along with the Income Tax Department raised the demand to Rs. 2,55,650. CPC would losses to acknowledge the losses that have been brought forward from the AY 2013-14 to the AY 2019-20 which results in asking the demand of Rs 2,55,650.

The taxpayer would not be qualified to secure the losses set off against the assessed income beneath the heading salaries stated under Section 71(2A) of the Income Tax Act of 1961.

The taxpayer argued, the assessee is the company, and no salary income would be there. In the case of the company, no choice would be there in the income return to specify the income beneath the heading salary however for the concern of the gratuity amounts and leave encashment expenses, CIT(A) allowed, the taxpayer was collecting the salary income. But the expenses were not being filed prior to furnishing the tax return, it was revealed in the tax audit report.

The court, as the taxpayer is the company as made by the under section 143(1) intimation, the question of assessing its income beneath the heading “salary” does not emerge. The order would liable to be set aside.