TaxTMI 
TaxTMI 
Finance Lease Agreements - Guidelines for investigation.
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....f taxation of leased assets under finance leasing agreements. The report of the Expert Group has been accepted by the Government. 2. Instances have come to notice of the Board that in some of the cases of finance lease agreements, the leased assets had never existed or purchase price for the leased assets came back to the lessor by discounting the lease rental either directly from the lessee or....
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.... inquiries as detailed below: i)The Assessing Officer should critically examine the lease agreement and also the supporting documents like insurance papers or inspection reports and in the case of companies, the Board resolutions. While examining the agreements, the Assessing Officer should particularly examine the following aspects in order to establish the genuineness of transaction and the o....
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....e lessor. g) the condition of transfer back of the asset at the end of the period of lease agreement and the option of the lessee to purchase the asset at the scrap value. ii) The Assessing Officer should make field enquiries to identify and verify about the existence of the leased assets. The transportation of the assets, the compliance of various provisions of law relating to the transfer o....
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....e sales are not effected at exaggerated prices. In such a case applicability of Explanation 3 to section 43 should be examined. To determine the correct fair market value, if the need be, the valuation of the asset may be referred to the departmental valuer. vi) The Assessing Officer should invoke the provisions of Explanation 4A to section 43(1) in cases of a sale and lease back transaction, w....