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Is rent paid to partner's huf by partnership firm deductible

Tax queries 2037 views 5 replies

income tax related question.
there is a partnership firm name A B & CO.. having two partner A & B .
Partnership firm took office on rent from one of the partner's huf. say A-Huf.
the question is 
can partnership firm claim rent as deduction (debit to p & l acc) ?
is it allowed under income tax?

Replies (5)

There is no any restriction  on payment of Rent to HUF of any partner.
but there is disallowance u/sec 40A (2)a, on excessive payment of rent over normal rent prevailing in market, paid to related parties as defined under sub clause (2)b.

Yes Mr. Umang, Partnership firm can claim deduction as a rent (debit to Profit & Loss account ), HUF is the seperate entity as per the Income Tax act. So that there is no question of disallowances.  

Is it possible to register a new partnership firm with same name by another persons with already existed name?  Is there any restictions on the names of the partnership names like in the case of companies Act. Please help me.

Is rent paid by firm on behalf of partner for the residence of partner & his family will allowable as deduction under income tax act in the books of the partnership firm, please confirm. 

Note :- Rent Agreement is between landloard & the partnership firm (& not with partner).

Rent can be allowed as deduction provided such rent is substantial and not charged in execess of market rates, else excess rent will be disallowed


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