Doubts on Lease Accounting

M.Sriram Shenoy (CA Final) (814 Points)

28 April 2008  

Please Clarify my doubt. A company (Public ltd company) has taken cars on operational lease (status of the lessor unknown). The said company have made additions to the said cars such as fixing of LCD tv, new seat covers, music system, photoelectric glass windows etc. The company is of the view to charge all such expenses in relation to all cars to revenue. Is this practice right?The lease deed is silent in this regard. If there are any relevant tax implications, then do let me know.