Director rent expenses

This query is : Resolved

Manish (Querist)
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05 November 2011 Mr X (who is a director of pvt ltd company Z) has a rent agreement with Mr. Y.

The rent agreement is a standard Leave n license agreement which prohibits sub tenancy or sub-lease.

The premises of Y rented by X are used by company Z for its daily business.

Can company claim this rent amount as expense in PnL account?

Can the company pay the rent on Directors behalf through its own account by cheque? or should the director pay from personal account and then claim reimbursement? How about TDS in either case?

If a resolution is to be passed, please provide brief format if possible.

Thanks,

ABHISEK TOSNIWAL

ABHISEK TOSNIWAL (Expert)
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05 November 2011 Dear Manish,

In case of a company, if any premises are taken on rent by its director & the company is using the said premises for its business purpose then the comapny can claim the rent paid by it as its expenditure. In such a case a resolution needs to be passed.

The company can either pay the rent from its own bank account or through its director. In such a case TDS would be deducted by the company if applicable.

Regards

Abhisek Tosniwal.

Manish

Manish (Querist)
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06 November 2011 Thanks Abhisek. Really appreciate it.