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Capital gains on sale under operating lease

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Ravindra Beleyur

Proprietor

24 Points Posted on 28 September 2012

Hi!

X has purchased plant and machinery 3 years ago. The depreciated value of the same is zero now. Now, X wants to opt for Operating Lease with Y and sells the P&M to them and gets the lease back under a non-cancellable lease back for a period of 5 years. and X has an option to buy back at a nominal value or enter into another non-cancellable lease back for another period of 5 years.

In the above context, is it possible 'NOT TO TREAT THE SALE FROM 'X' TO 'Y' AS A 'TRANSFER'?

I am thankful if anybody could throw some light with any recent decided cases in this regard.

With best regards,

Ravindra Beleyur

Replies (1)

prem kashyap

AGM

25 Points Posted on 28 September 2012

Originally posted by : Ravindra Beleyur
	Hi! X has purchased plant and machinery 3 years ago. The depreciated value of the same is zero now. Now, X wants to opt for Operating Lease with Y and sells the P&M to them and gets the lease back under a non-cancellable lease back for a period of 5 years. and X has an option to buy back at a nominal value or enter into another non-cancellable lease back for another period of 5 years. In the above context, is it possible 'NOT TO TREAT THE SALE FROM 'X' TO 'Y' AS A 'TRANSFER'? I am thankful if anybody could throw some light with any recent decided cases in this regard. With best regards, Ravindra Beleyur