Depreciation on rented asset

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 May 2017 Dear Experts,
i have taken bus on rent from one of the individual for transportation of workers from their house to factory and from factory to their house and for that we are paying Rs. 30000 PM after deducting 1% TDS u/s 194C, pls tell me can i claim 15% depreciation on this rented bus.

Regds
Abhilash

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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05 May 2017 You can't claim depreciation on rented bus. Only owner can claim depreciation.

Expert : Anonymous

Expert : Anonymous (Expert)

05 May 2017 if it is finance lease, means at the end of agreement ownership will be transfered, than depreciation will be claimed on pv

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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06 May 2017 In case of finance lease you can claim depreciation.

Querist : Anonymous

Querist : Anonymous (Querist)

09 May 2017 Dear Sir,
the Agreement was made wherein it is mention that we are taking the bus on rent for two year however the bus is still in the name of him. pls clarify in this scenario can we claim dep. or not

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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09 May 2017 In this scenario you can't claim depreciation.
The judgment in the case of Mysore Minerals recognizes a person as an owner who is in possession of property in his own right exercising such dominion over the property as would enable others being excluded there from. In a lease transaction also there can be only one owner of the asset, that is, either the lessor or lessee and not both of them or either of them at their discretion. Whereas in the case of operating lease, it is the lessor who is the real owner of the asset, but in case of finance lease, it is the lessee who is to be regarded as the real owner of the asset. Only the lessor can claim depreciation in case of an operating lease and the lessee in a case of finance lease.

Querist : Anonymous

Querist : Anonymous (Querist)

09 May 2017 sir pls clarify what is finance lease.........

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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10 May 2017 A finance lease, is a type of lease in which a finance company is typically the legal owner of the asset during the duration of the lease, while the lessee not just has operating control over the asset, but also has a substantial share of the economic risks and returns.