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A landlord has rented land to a tenant who then constructed a building on it. The discussion seeks clarification on whether this arrangement constitutes a lease, specifically an operating lease, even if the landlord retains the risks and rewards. The consensus is that it is indeed an operating lease.

Catherine

Catherine (Querist)
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24 June 2021 Hello members,
Requesting Clarification
A Landlord has given his Land to the Tenant (on rent) and he has constructed a Building upon it whether this scenario is to be considered as Lease or not, if so will it come under Finance or Operating Lease?
And if it not a lease what other provision is applicable?
Thank you in advance.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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24 June 2021 It will be considered as lease. It's operating lease.

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Catherine

Catherine (Querist)
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24 June 2021 Thank you for your response Sir but my doubt is if the risks and rewards still lies with the lessor still it will be considered as Operating lease?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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24 June 2021 Yes......................

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