Treatment of capital expenditure

In the lessors books:

Finance lease, you cannot claim depreciation but you might incur capital expenditure and not maintenance depending upon the contract. Asset is derecognised and receivables added equal to the underlying assets value. No need to classify revenue or capital.

Operating lease- you can claim depreciation as you will not derecognise the underlying asset as in the case  of a finance lease.

Now, after capital expenditure, will the lessee capitalise the costs into the right to use asset? I’m not sure either, if I can get an answer from IndAS, I’ll reply back,

In the books of lessee:

depreciation can be claimed. Capital expenditure depends upon the explicit contract as to what falls under his expenses, eg., taps, boilers maintenance is his, any major damages to the roof are lessors expenses. Maintenance is revenue, new fixtures and fittings will be capital in nature. 

From lessor Point of View : No Treatment.

from lessee Point of view : Recognize it as lease Improvrment (capitalize it) and show it under balance sheet under Tangible assets. You can claim Depreciatiom over leasehold improvement over lease Term.


income Tax : i think income Tax allow depreciation on it. but not sure check it.

Lesse cannot claim depreciation since the ownership is not transferred.
Depreciation can be claimed by the lessor.

It’s not so clear in IndAS. 

Which Ind As?