Question

ii) Lease rentals paid by the lessee are deductible for computing taxable profits;
It provides finance without diluting the ownership or control

Answer 1

Dear student,

A lease is an agreement where the owner of an asset gives right to second party to use asset in return of rent (periodic payment). The amount received by owner of asset is tax deductible. It is beneficial for both parties as the owner of asset gets the amount received as rent deducted from his income, hence saves tax.
The lessee benefits in a way that he need not to raise finance by way of issue of equity to finance the asset. Taking asset on rent, lessee can invest his funds on core projects and retain control over ownership.
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Regards