06 September 2010
A partnership has taken a building on rent. One of its partners has a business in individual capacity also. Both businesses are carried on in the building rented. The rent is paid by the partnership firm and the prop. Firm fifty-fifty. Is the rent paid by the prop. Firm is tax deductible??? Futher, there was a confliction between the vendor and the firms, due to which the firms did not pay the rent for the last two years. But in 2009-10, it had to pay the rent under litigation to the court in cash for the two years. The partnership firm deducted tax and the balance is deposited by Both the firms equally in cash to court. It this treatment OK???? If not, what it should be??? Whether the rent paid will be deductible ???