Accounting of factory rent,partner's salary/interest

634 views 2 replies

CA Sanjay Baheti

PROPRIETOR

1160 Points Joined January 2010

One of my client being a Partnership Firm engaged in Manufacturing activities.The Factory Premises are in the name of 2 partners jointly & the same has been given to PF on rent as per rent agreement between Partners & PF.

Now query is as under:-

i) whether Factory Rent is to be provided/accounted for in books mandatory in case net book profit is negative after providing the same as per rent agreement or not after keeping in mind I.T. Provisions.

ii) In case of negative Book profit so far PF is concerned prior to Partners Salary & Interest as per partnership deed/agreement the same is to be provided/booked for mandatory or not.

Replies (2)

Prateek Agarwal

Sr. Executive - Finance & Accounts

1732 Points Joined February 2011

Factory rent has to be shown in the books as it is an operating expenditure.

In case of loss, remuneration ot partners, as per income tax, is restricted as per sec 40(b)(v).

Regards

Prateek

eunice

none

21 Points Joined August 2012

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