Tds on finance lease rental

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 January 2014 One Pvt. Ltd. company has enter into Finance Lease agreement for the purchase of machinery with another Pvt. Ltd. Co.

Major Terms of the Contract.
1. Lessee will pay principal & finance charges on monthly basis.
2. At the end of the lease period lessee will pay token amount to purchase the leased machinery.

Issue
1. What are the accounting treatment in the books of lessee.
2. Who can claim depreciation on the machinery.
3. Whether TDS to be deducted on finance charges or on full installment amount.

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

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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05 January 2014 This is the deal of machinery purchase and not to run the same on hire so no TDS

Accounting treatment will be debit the assets with each lease and interest or financial charges portion as interest expenses. Final payment also to be capitalised, The lessee will claim the depreciation.

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