03 August 2011
One of my corporate client is in the process of leasing an equipment to its customer.
From the viewpoint of accounting, the lease would be classified as a finance lease.
The legal title of ownership would be transferred at the end of the lease period.
As i am aware Income tax does not make a distinction between the type of leas and depreciation is eligible to the lessor (to this fact there is a CBDT circular)
However, there are supreme court decisions to the fact as regards to who is the beneficial owner of the asset, shall be eligible for depreciation.
In one of the case laws it has been held that under finance lease, depreciation is eligible to the lessee.
Would like to know your response as regards to the actual position of law for the same?
CAclubindia
