A Private company in which i m auditing is using the House Property of the Directors & in return the company is paying all the maintenance charges of the property in lieu of Rent.
So company is not paying any rent to the Directors but it is paying all maintenance charges of property.
Pls. help with a Case study,if possible, whether it is legal or it will be disallowed. Thanks
10 July 2009
If the payment is reasonable and on par with the market rate it will be allowed as a deduction. There should be agreement between the Company and the Director and proper resolution should have been passed for the same and in notes on accounts disclosure should be made that RS.___ has been paid as maintnence charges to the director.
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