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It is permissible to pray the Janazah (funeral) prayer inside the mosque or outside. A’isha (R.A.)(the prophet’s wife) said: “The messenger of Allah prayed the Janazah (funeral) prayer for Suhail Bin Baid’a in the mosque, and the companions prayed the Janazah (funeral) prayer for Abu Bakr and Omar (R.A.) in the mosque without anybody denying this action, for the Janazah (funeral) prayer is like any other regular prayer.” [Reported by Imam Muslim]