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

Umang (Chartered Accountant) (71 Points)

13 July 2012

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?

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5 Replies

CA Gaurav Choradia (Relationship Manager ) (418 Points)
Replied 13 July 2012

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.

CA.Kanhaiyalal Gupta (Taxation Incharge) (290 Points)
Replied 13 July 2012

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.

kiran kumar (articles assistant) (33 Points)
Replied 01 August 2012

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.

PARAG ARVIND SHAH (ACCOUNTANT) (26 Points)
Replied 25 September 2015

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).