Rent deed
This query is : Resolved
28 August 2014
Two Brothers "A" & "B" Purchases shop jointly having equal share of Rs:-78 Lakhs. B is conducting its own business in that shop
can "A" receive rent from "B" as A have invested funds in shop but only used by B?
Further will it be necessary to have rent deed between them for claiming rent exp in income tax. B is covered by Audit?
can "A" receive rent from "B" as A have invested funds in shop but only used by B?
Further will it be necessary to have rent deed between them for claiming rent exp in income tax. B is covered by Audit?
28 August 2014
Dear Kamlesh,
Of course A can receive rent from B.
Yes rent deed is must.
Of course A can receive rent from B.
Yes rent deed is must.
28 August 2014
is it necessary to notarise that as rent is req for april 2014 but notary will be done now
21 July 2025
Here’s a clear breakdown of your query regarding the joint ownership and rent deed between the two brothers:
Situation:
Two brothers, A & B, jointly purchased a shop (equal share in Rs 78 lakhs).
B is running his own business in that shop.
Question 1: Can A receive rent from B since A invested funds but B is using the shop?
Question 2: Is a rent deed necessary for claiming rent expense in Income Tax?
Question 3: Is notarization necessary if rent deed is executed now but backdated rent is for April 2014?
Answers:
Can A receive rent from B?
Yes, absolutely. Since the property is jointly owned, B (who uses the shop for business) can pay rent to A for A’s share.
This is treated as normal rental income for A and a rent expense for B’s business.
Is rent deed necessary?
Yes, a formal rent deed is necessary to document the rent agreement.
For Income Tax purposes, especially since B’s business is under audit, having a proper rent deed supports the legitimacy of rent expenses claimed by B and rental income reported by A.
Is notarization necessary?
Notarization is not mandatory but recommended.
It strengthens the authenticity of the rent deed and helps during scrutiny or audit.
Even if the rent deed is executed now but made effective from April 2014, the document can be backdated (but it must be genuine and reflect actual agreement).
Courts or tax authorities may ask for proof that rent was actually paid during that period (bank statements, receipts, etc.).
Additional Suggestions:
Ensure rent is actually paid from B to A, preferably by cheque or bank transfer, to create a paper trail.
Maintain all rent receipts and records for audit.
Clearly specify rent amount, payment schedule, and terms in the rent deed.
If A is receiving rent income, he should declare it in his income tax return under “Income from House Property.”
Situation:
Two brothers, A & B, jointly purchased a shop (equal share in Rs 78 lakhs).
B is running his own business in that shop.
Question 1: Can A receive rent from B since A invested funds but B is using the shop?
Question 2: Is a rent deed necessary for claiming rent expense in Income Tax?
Question 3: Is notarization necessary if rent deed is executed now but backdated rent is for April 2014?
Answers:
Can A receive rent from B?
Yes, absolutely. Since the property is jointly owned, B (who uses the shop for business) can pay rent to A for A’s share.
This is treated as normal rental income for A and a rent expense for B’s business.
Is rent deed necessary?
Yes, a formal rent deed is necessary to document the rent agreement.
For Income Tax purposes, especially since B’s business is under audit, having a proper rent deed supports the legitimacy of rent expenses claimed by B and rental income reported by A.
Is notarization necessary?
Notarization is not mandatory but recommended.
It strengthens the authenticity of the rent deed and helps during scrutiny or audit.
Even if the rent deed is executed now but made effective from April 2014, the document can be backdated (but it must be genuine and reflect actual agreement).
Courts or tax authorities may ask for proof that rent was actually paid during that period (bank statements, receipts, etc.).
Additional Suggestions:
Ensure rent is actually paid from B to A, preferably by cheque or bank transfer, to create a paper trail.
Maintain all rent receipts and records for audit.
Clearly specify rent amount, payment schedule, and terms in the rent deed.
If A is receiving rent income, he should declare it in his income tax return under “Income from House Property.”
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Tax on Deemed Capital Gain
- Exiting partner in partnership firm in gst portal
- F & O PROFIT REPORTING FOR AY 2026-27
- Type of Capital Gain
- Regarding ITR filing with more value than showing in AIS/TIS
- Rental income of jointly held property
- ITR-3 File/Error Found
- ITR-Capital Gain
- Traces submitting correction statement error
- TDS _Long term Capital Gain ref.sec 214 Table 2
- Gst on travel by air for business purposes
- Loss of interest in PF transfer from EPFO to Trust
- Seeking Advice: High Tax Shortfall on Job Switch + Let-Out House Property Loss in FY 2025-26
- TDS offline utility
- TDS on rent received on hardship compensation being rent on redevelopment of building
- Housing Society-ITR5
- TDS on Rent received on redevelopment of building
- Indian IT Portal issue in computing tax as per UK-India DTAA
- Capital Gains on sale of residential flat
- Upload Level ValidationITR3Category of Defect B/D
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
