Loopholes In Sale, Lease Deals Plugged

It has plugged possible loopholes in the revised provisions for sale and lease and lease back transactions.

The finance minister stated that modification of the earlier proposal is being made. ``It is being proposed that in the case of successive sales of the asset also the written down value in the books of the original seller, will be taken as the cost of the lessor,'' the new bill stated.

The earlier budget proposal stipulated that the written down value of the asset in the hands of the lessee as the cost of the asset to the lessor. It was said that it was applicable to all second-hand assets.

 

This measure was expected to prevent loss-making concerns from indulging in unhealthy trade-off of depreciation. In the initial budget proposal sale and lease and lease back transactions which involve three person transactions were possible.

The amendment had earlier stated that ``such person acquires on lease, hire or otherwise assets from the first mentioned person.'' The wording ``first mentioned person'' was creating a problem and would have lead to possible sale and lease and lease back transactions.

``An interesting innovation, which would have been possible, had the earlier amendment gone through was thwarted,'' stated the head of a finance company.