Salary repayment by directors to the company

Pawan Mittal (CA Final) (702 Points)

25 February 2017  

Dear Experts

X Pvt. Ltd. has been paying salary to its 3 directors since last 2 years. In the F.Y. 2016-17 company has paid salary to its 3 directors by cheque (on which TDS has been deducted and deposited) upto February, 2017. 

The company is incurring losses in F.Y. 2016-17. To reduce this loss, directors want to repay the salary received by them, back to the company.

Is it possible as per Income Tax Act? What will be the treatment of TDS?

Please support your answer with relevant sections or decided case laws.

Thanks in advance