As-19 lease

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This query is : Resolved

Keval (Querist)

07 September 2011 Dear Experts,
I have gone through an rent agreement of leased premises with lock in period of 3 year. Where leasee has to pay to the lessor rent in following way:-

1) In first year rent payable by the lessee will be 1000000(P.M) + service tax (F.Y. 2010-11)

2) second year rent payable by the lessee will be 1200000(P.M) +service tax (F.Y. 2011-12)

3) third year rent payable by the lessee will be 1500000(P.M) + service tax (F.Y. 2012-13)

Lease nature is of operating lease.

Now my query is about rent equilisation. In the books of lessee is rent equilisation has to be done if the rent agreement contains above clause?
If yes, then how it would be done?

Warm Regards !!!!!!!!
keval

CA Pushpendra Gaur

CA Pushpendra Gaur (Expert)

26 September 2011 well since it's an operating lease as mentioned by you, whole lease rent for the year is recognised in the book in the manner of payment.
Here, no where annual lease rent been mentioned.

CA Pushpendra Gaur

CA Pushpendra Gaur (Expert)

26 September 2011 If the terms of lease would b lik such that the annual lease rent wud be 12.33 lakhs and the terms of payment wud be as it given by u then in such cash equalisation was permissible

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