Allowed deduction of business loss including amount paid as managerial remuneration on account of it being business expenses

Universal Buildrise Private Limited Vs ITO (ITAT Delhi)

 M/S. Universal Buildrise Private Limited (Appellant) filed an appeal against Order dated September 30, 2019 of the Ld. CIT(A)-9, New Delhi, relating to the Assessment Year (AY) 2016-2017.

The Appellant filed its return of income declaring loss and paid taxes on book profit under Minimum Alternate Tax (“MAT”) provisions. The case was selected for scrutiny and a notice under Section 143(2) of the Income Tax Act, 1962 (“the IT Act”) was issued. During the course of assessment proceedings, the Assessing Officer (“AO”) noted that the Appellant claimed to be engaged in the business of supplying books and during the financial year 2016 – 2017, the name of the Appellant has been changed from “M/s. Universal Book Distributors Private Limited” to “M/s. Universal Buildrise Private Limited”. The source of income of the Appellant was rental income, but he also claimed to be engaged in the trading of the book etc.

The AO held that the Appellant had not carried out any business activities and the payments made as managerial remuneration and other expenses were not business expenses. The AO alleged that the business loss claimed by the Appellant was just to avoid the tax on income from house property.

Please become a Premium member. If you are already a Premium member, login here to access the full content.