Deduction of Depreciation on Leased assets is claimed by whom- Lessee or Lessor? Whether the treatment is different in case of Financial and Operating Leases?
Please clear the doubt......
4 Replies
Tribhuvan Aditya Singh
(Student as well as Self-employed)
(3710 Points)
Replied 12 July 2014
in case of operating lease, dep. to be claimed by lessor..... in case of financing lease, dep. to be claimed by lessee.
CA and CMA Ravinder Singh
(CA and CMA)
(853 Points)
Replied 12 July 2014
under income tax act, no difference has been made between operating and financial lease....so in both cases depreciation is claimed by lessor, not the lessee......
CA AMIT VIJAY
(Manager-Audit)
(123 Points)
Replied 13 July 2014
Depreciation on Assets purchased on Hire purchase agreements is claimed by the purchaser....then why not in the case of Financial Leases as risk and rewards are transfered to the lessee and in some agreements the asset is automatically transfered after the payment of final lease rental as same as in hire purchase????
Please reply.......
CA and CMA Ravinder Singh
(CA and CMA)
(853 Points)
Replied 13 July 2014
Your view is right.....but the explanation i know about this is that the accounting treatment as provided by AS 19 for Lease agreements is very complex in nature. So to avoid this complexity, IT act has simply provided that depreciation can be claimed only by lessor, not lessee.....
and the thing is final answers with both treatments will come same.....
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