Question

State features of lease financing

Answer 1

The important features of lease contract are as follows:

1. The lease finance is a contract.

2. The parties to contract are lessor and lessee.

3. Equipment are bought by lessor at the request of lessee.

4. The lease contract specifies the period of contract.

5. The lessee uses these equipment’s.

6. The lessee, in consideration, pays the lease rentals to the lessor.

7. The lessor is the owner of the assets and is entitled to the benefit of depreciation and other allied benefits e.g., under sections 32A and 32B of the Income-tax Act.

8. The lessee claims the rentals as expenses chargeable to his income.

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