Ur problem has a very simple solution. U just think that salary is paid to a person who works for the firm that is an employee of the firm. And rent is paid to a person who has let some property to the firm that is landlord for the firm. What if both the persons are same that is not the concerned matter. It will be required to pay salary and rent both to its employee if employee is landlord also.

Dear Sameer, Please note there is no restriction regarding that payment of rent to the accountant. A firm may pay rent and salary to its employee if situations require so. Apart from that please note the employer is required to consider the rent and salary both for the purpose of Tds. And if the accountant is related party then the amount paid ust be considered to fair market value of both salary and rent. Any excess will be disallowed by Income Tax Department. Regards ! Lokesh Garg !

There is no restriction as far as partnership act is concern for payment of salary as well as rent to its employees. However as per section 40(2) of the income tax act 1961 if the employees is also a relative of the partner then the the excess or unreasonable payments of salary as well as rent shall be disallowed.

As per Chartered Accountants Act 1949 , there is guidelines which gave basic principles that what CA can do and which act can be against the act and regarded as Professional Misconduct . As per Companies act there a company can't be auditor so there is no chances of related party transaction or transaction which might have significant influence. As per your question there is a Firm and an accountant rented his property to the firm . Firm is paying salary as an accountant and rent as well . Its no where mentioned that accountant is partner or relative of partner of the firm (even in that case answer going to be same) . Commercial transaction a transaction where two or more party agreed to share goods, service or something which has value in exchange of reward in cash or in kind .Its a kind of contract whether oral or written . These type of transactions are always at Arm's Length Price. On the above discussion it can be concluded that here there is no direct/indirect relationship between partner and accountant ( so no need to check related party transaction or not to be shown in their report ) so there is no restriction with regard to such type of transaction. Its fully allowable to pay salary along with rent.

Dear Sir there is no restrictions for run business on rented premises whether owned by his relative or employee. No section bound to do so.