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Whether Rent Paid to Partner is covered u/s 40(b) ?

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Jai Mishra

16 Points Posted on 10 April 2020

WHY RENT PAID TO PARTNER IS NOT CONSIDERED u/s 40(b) ???

The Language used in section 40(b) is "payment of salary, bonus, commission or remuneration, BY WHATEVER NAME CALLED."

So, Rent should also be considered in BY WHATEVER NAME CALLED.

Replies (3)

Quick Summary

This discussion explores whether rent paid to a partner is covered under Section 40(b) of the Income Tax Act. While the section explicitly mentions salary, bonus, commission, and remuneration, rent is generally not included. This is because rent paid to a partner is typically treated as income from house property for the partner, whereas the other payments are reported under PGBP. Therefore, rent paid to a partner is usually allowed as a deduction and falls outside the scope of Section 40(b).

CA Thuppada Aruna

Job

15 Points Posted on 11 April 2020

As per section 40(b), only payment of salary, bonus, commission, remuneration are included. The simple thing observed here is that all these payments, partners are supposed to report under PGBP in their Income Tax Return, so controls have been laid. Whereas for Rent, whatever the amount paid as rent is considered under HP income, which has a for standard ruling for all. So, the same is not included in 40(b)..

CA Naveen Chand

Chartered Accountant

12739 Points Posted on 11 April 2020

rent is not covered here

any amount paid to partner as rent is allowed as deduction and the same is not covered by Sec 40(b)

Jai Mishra

16 Points Posted on 27 April 2020

Originally posted by : CA Thuppada Aruna
	As per section 40(b), only payment of salary, bonus, commission, remuneration are included. The simple thing observed here is that all these payments, partners are supposed to report under PGBP in their Income Tax Return, so controls have been laid. Whereas for Rent, whatever the amount paid as rent is considered under HP income, which has a for standard ruling for all. So, the same is not included in 40(b)..