Deepak Thukral
Manager Accounts
Vishwa2
Manager-finance
SUNEELKMASUR
Salaried
Manish01
Consultant

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1.A building is taken on lease by a company and a sum of Rs.100000 paid initially.
2.Depreciation not allowable under income tax act so how we can claim expenses of Rs.100000, whether by writing off of leased assets over the term of lease.(say 5 years)

From India , Gurgaon
THE QUESTION PUT BY YOU IS NOT CLEAR. THE PAYMENT OF RS.1.00 LACS IS ON WHAT ACCOUNT. SUPPOSE A DEPOSIT OF RS.1.00 AS SECURITY IS GIVEN, IT IS REIMBURSABEL AT THE END OF THE LEASE PERIOD ON GIVING THE POSSESSION OF THE BUILDING TO THE LAND LORD. IT IS NECESSARY TO ASCERTAIN THE NATURE OF THE PAYMENT. SUPPOSE IT IS LEASE RENT FOR 5 YEARS, PAID IN ADVANCE, THEN EVERY YEAR 1/5TH OF THE AMOUNT CAN BE CHARGED TO PROFIT AND LOSS ACCOUNT AND THE BALANCE HAS TO BE SHOWN AS PREPAID EXPENSES. THESE EXPENSES WILL BE AN ALLOWABLE EXPENSE UNDER THE INCOME TAX ACT, 1961. THERE IS NO RULE OF THUMB ALL DEPENDS ON THE NATURE OF THE PAYMENT.
DEEPAK THUKRAL
CHANDIGARH

From India , Chandigarh
Hi, You should show it as Expenses paid in advance that forms part of current assets. rgds vishwanath
From India , Bangalore
Hi Manish,
The lease advance amount paid will go as advance and comes as current assets. There is no need to depreciate the amount as you get it back.
The rent of office what you will be paying will show as Direct expenses.
regards,
suneel.

From India , Bangalore
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