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Very very urgent

Tax queries 1936 views 16 replies

whether a firm can pay rent of the partners accomodation, and book it as expense or it have to debit tyhe same to partners capital a/c.reply

Replies (16)

It should be shown as drawing and need to debit partner's capital account.

Firm can not claim deduction on a/c of rent paid for partner's accomodation.

These expeses are personal in nature. they are not incurred for bussiness purpose. hence need to be disallowed.

go throught the parnership deed, if deep agree with the same show as expense otherwise dr to capital account.

but wait for more replies.

No it is not deductable

its drawings to partners, 

capital a/c of partners would get debited for such sum paid from firm.

it should be treated as drawings

No it is not deductable

If it is used for the purpose of firms business, then it may be allowable.

Hello...Can anyone give me the checklist of Internal Audit of Society which runs Schools, Colleges and Institution....Its very urgent

 

Ronak Mashkaria

it will b treated like drawings n must b debited to partner's capital a/c..

There is a case law on this where the partner used to carry on business activities through his home. It was proved to the satisfaction of the Department and only a part of rent was disallowed. Balance portion was allowable.

If provided in deed & partner is living in that accomodation alone ( Without Family) than we can stablish same for bussiness purpose & get this diduction in income tax

EVEN THOUGH RE-EMBERSMENT OF RENT EXP. HAS MENTIONED IN DEED, IT’S  A PARTNERS PERSONAL EXP. SO IT IS DISALLOWABLE EXPS.

it is treated as drawings and it should be deduct By CApital Account...........

if such accomodation is mentioned in partnership agreement, and the accomodation is taken on rent by firm/ company for exclusive use by partner/director, with payment clause, then it would be available for deduction, otherwise all such payments are to be debited from capital account of respective user partner/director.


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