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Accounting of factory rent,partner's salary/interest

CA Sanjay Baheti (PROPRIETOR) (1155 Points)

26 April 2012

One of my client being a Partnership Firm engaged in Manufacturing activities.The Factory Premises are in the name of 2 partners jointly & the same has been given to PF on rent as per rent agreement between Partners & PF.

Now query is as under:-

i) whether Factory Rent is to be provided/accounted for in books mandatory in case net book profit is negative after providing the same as per rent agreement or not after keeping in mind I.T. Provisions.

ii) In case of negative Book profit so far PF is concerned prior to Partners Salary & Interest as per partnership deed/agreement the same is to be provided/booked for mandatory or not.

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2 Replies

Prateek Agarwal (Sr. Executive - Finance & Accounts) (1732 Points)
Replied 26 April 2012

Factory rent has to be shown in the books as it is an operating expenditure.

In case of loss, remuneration ot partners, as per income tax, is restricted as per sec 40(b)(v).

Regards

Prateek

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eunice (none) (21 Points)
Replied 11 August 2012

Few landlords accept hairy pets these days, however some landlords may accept dogs by negotiation especially long haired varieties. They will want to know about your dog or want to meet your dog before signing the tenancy agreement. Getting a new pet does not have to be a big deal, unless you are leasing. Normally, you would just select out the pet and all the new stuff, but a lot of apartments really require a monthly pet rent and a deposit. You might also just pay up instead of trying to hide the pet; you will get caught.