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Rent and tds on rent to be claimed as expense or not.

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Prathima

Student

23 Points Posted on 27 May 2013

Hello,

The rental agreement is between Firm Y and the owner. Its renewed every year. But from past few months the business of Firm Y is almost near to closing.

Another “Firm X” is using the premises now and paying rent to the owners in the name of Firm Y because of mutual understanding between them.

But the agreement is still in the name of Firm Y as one of the partner of Firm Y is the employee of Firm X.

Rent is paid from past 7 months. Amount is Rs.35000 per month. TDS Rs.3500 is also paid but under TAN of Firm Y. ( from Sep 2012 to March 2013).

Can Firm X claim rental expenses in its business.

If not then what are the other options.

Replies (1)

Z

Tax Consultation (US and India)

2348 Points Posted on 27 May 2013

Firm X can claim rental expense since this expense is specifically for the prupose of business

I will consider that mutual understanding as an oral mutual agreement which is valid in law. Its fine if owner is not disputing where he can claim for breach of terms of contract from firm Y (if firm Y is not allowed to give possession to any other person). Further the money was paid by firm X to the owner and he accepted the same for 7 months and yet he hasn't disputed then its all fine

There should be no problem