Make an analysis between the purchase and taking on lease of an asset for the purpose of business by the assessee considering the Income Tax provisions and the benefits available. Which option is considered to be better

Analysis between Purchase of an assets and taking the assets on Lease for the purpose of business In case of purchase, depreciation is allowed under section 32. On the other hand, depreciation will not be allowed u/s 32 in case of assets taken on lease. This principle has also been upheld by the Hon'ble Supreme Court in case of ICDS Ltd. V/s CIT (2013) 350 ITR 527. In case of lease, lease rent paid will be allowed as deduction u/s 37(1) as revenue expenditure. Repairs are also allowable under section 31. In case of purchase, insurance premium, current repairs are allowed as deduction u/s 31 and interest on borrowed funds is deductible u/s 36 as revenue expenditure. Purchase of machinery would create tangible assets which can also be mortgage in case of finance needs whereas in case of assets taken on lease, it is not possible. In case of purchase option, residual value at the end of useful life belongs to owner. Capital gains tax liability or savings should also be taken into consideration. The benefits available as to tax payments are to be worked out separately under both the situations and be analyzed to find out which option is better. However, taking of an assets by investing own funds be always found to be better because of the available benefits under the tax laws and having of the tangible assets in the business.