Distinguish between the following: Leasing and Hire purchase.

Basis Leasing Hire Purchase Meaning Leasing is an agreement where one party buys the asset and allows the other party to use it by paying consideration over a specified period is known as leasing. The deal in which one party can use the assets of the other party for the payment of equal monthly instalments is known as hire purchase. Claim of Depreciation The lessee cannot claim depreciation. The hirer is entitled to claim depreciation. Tax Benefit The entire lease rental is a tax-deductible expense for the lessee. Only the interest component of the hire purchase instalment is a tax-deductible expense for the hirer. Salvage Value The lessee, not being the owner of the asset, does not enjoy the salvage value of the asset. The hirer, being the owner of the asset, enjoys the salvage value of the asset.