what is sale and lease back transaction??
CA Anand Sarda (Working) (1580 Points)
05 July 2008what is sale and lease back transaction??
Rishi Vyas
(Internal Auditor)
(189 Points)
Replied 06 July 2008
Some Companies in order to meet their cash requirement, sell their particular fixed asset, say machinary, to a leasing finance company and get the cash.
Subsequently the seller company enters into a lease contract with the lease fin. company andf takes the same machine on lease.
In this way its requirements regarding the machinary and the cash are met, only it looses its ownership control over that fixed asset.
CA Anand Sarda
(Working)
(1580 Points)
Replied 08 July 2008
Are such transactions recognised under IT Act, 1961?
Satyendra sahu
(service)
(216 Points)
Replied 08 July 2008
Hi anand,
In opinion,
See once you sell your fixed asset, then IT act will apply and it will be treated as per the laws of IT act. and capital gains or loss will come in picture as applicable.
Now taking the asset on lease back, then you can deduct the lease rental directly from your P&L account. and while making payment section 194(I) will also apply.
VIPLOVE GOYAL
(CA STUDENT)
(58 Points)
Replied 27 July 2008
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