The lease premium is charged for most of the government or semi government organization for allotting land or building to be allotted for various business purposes. These lease terms are generally for period ranging from 15 years to 99 years. The actual rental is very low but one time non refundable lease charged is very high. The organization that takes such lease , often , get into controversies on the treatment of such lease in its accounts for the purpose of computation of income . The controversy is mainly on following :
- Whether the lease payment is capital of revenue expenditure?
- If it is revenue expenditure , whether it should be allowed to be deducted at one go or should be amortized over number of years for which lease was taken?