Office on Rent

This query is : Resolved

Devendra (Querist)
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03 July 2011 Mr. X, Director of Co. XYZ Pvt. Ltd. has made a simple rent agreement with the Landlord in his own name. But the place is utilized by the Co. Can the Co. claim the rent expense in its books of accounts? If no, then suggest some other way by which the rent expense can be claimed. Is it mandatory to make a proper Leave and License Agreement between Mr. X and the Landlord?

Regards,
Devendra

U S Sharma

U S Sharma (Expert)
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03 July 2011 place used by company having rent bill in name of director is allowed, however for safeguard, pay the rent by cheque.

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CA. Krishna K Neeraj

CA. Krishna K Neeraj (Expert)
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04 July 2011 Also pass a board resolution in this regard

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CA CS CMA Sanjay Kumar Sareen

CA CS CMA Sanjay Kumar Sareen (Expert)
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04 July 2011 COMPANY CAN PAY THE RENT ONLY IN THE CASE ASSIGNMENT RIGHTS ARE AVAILABLE IN THE RENT AGREEMENT WITH DIRECTOR. IN THAT SCENARIO PASS THE BAORD RESOLUTION FOR ASSIGNMENT AND COMPANY CAN CLAIM RENT EXEPNSE.
RGDS
SANJAY SAREEN
FACULTY OF COMMERCE STUDIES
PITAMPUR DELHI

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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04 July 2011 The company can pay the rent directly to the landlord and claim the same as the business expenses as the premises is being used by the company. It is sufficient if the board resolution to this effect is taken and passed in the board meeting.

In case the rent exceeds the prescribed limit then the Company should deduct the TDS and deposit the same in the name of the Land Lord.