https://www.taxtmi.com/article/detailed?id=1558 A divergence exists between AS 19 accounting treatment, which capitalises leased assets and allocates depreciation to the lessee, and income tax rules under Section 32 as clarified by a CBDT circular, which do not automatically recognise such accounting capitalization for tax depreciation. The draft DTC attempts to define "financial lease" and place depreciation with the lessee but the proposed definition is defective-requiring full cost recovery through rentals and ownership by lessee at lease end-thereby failing to capture the full accounting concept and leaving resolution to fact driven judicial analysis and the substance over form principle. en-us Mon, 02 Jan 2012 10:47:25 +0530 Mon, 02 Jan 2012 10:47:25 +0530 TaxTMI RSS Generator https://www.taxtmi.com/article/detailed?id=1558 A divergence exists between AS 19 accounting treatment, which capitalises leased assets and allocates depreciation to the lessee, and income tax rules under Section 32 as clarified by a CBDT circular, which do not automatically recognise such accounting capitalization for tax depreciation. The draft DTC attempts to define "financial lease" and place depreciation with the lessee but the proposed definition is defective-requiring full cost recovery through rentals and ownership by lessee at lease end-thereby failing to capture the full accounting concept and leaving resolution to fact driven judicial analysis and the substance over form principle. Articles Income Tax Mon, 02 Jan 2012 10:47:25 +0530 https://www.taxtmi.com/article/detailed?id=1558