lease

https://corporatefinanceinstitute.com/resources/knowledge/accounting/lease-accounting/

in taxation ?

1. Under the Income-tax Act in all leasing transactions, the owner of the asset is entitled to the depreciation if the same is used in the business, under section 32 of the Income-tax Act. The ownership of the asset is determined by the terms of contract between the lessor and the lessee.
2. The Central Board of Direct Taxes vide Instruction No. 1978 dated 31st December, 1999 [F.No. 225/190/98/IT(A-II)] has laid down the line of investigation in such cases. In cases where assets are factually non-existent, having been created by hawala transac­tion, the question of allowance of depreciation does not arise. In cases of sale and lease-back of assets without any alteration in the situation of assets and its working, the denial of deprecia­tion claimed has to be considered keeping in view the principle laid down by the Supreme Court in the case of McDowell & Co. Limited.
3. It has come to the notice of the Board that the New Accounting Standard on ‘Leases’ issued by the Institute of Chartered Ac­countants of India require capitalization of the asset by the lessees in financial lease transaction. By itself, the accounting standard will have no implication on the allowance of deprecia­tion on assets under the provisions of the Income-tax Act."