Leasing

Hi,

Mr.A has acquired a Land on lease for atleast 20 years.. He construct a shed (permanent nature) on it. Can anyone tel about accounting and tax implications? To whom does the lease belong..owner or the lessee?

 

Replies (1)

Dear Anne,

 

Capitalised the cost of construction of shed in your accounts and don't capitalises lease rental to be payable to lessor of land. Even if u take land on lease for 20 years, it would not allow u to enjoy the transfer rights.

 

if the shed has been used for business purpose, then U can take the benefit of depreciation on shed. Further, lease rental paid for land should be a deductible expenses under income tax act provided u carry on the business on the said land or u utilising that land for business purpose.

 

Hope this solves u'r query.

 

Regards,

 

Manoj

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