Uploaded by Javed Khan. Did you find this document useful? Is this content inappropriate? Report this Document. Flag for inappropriate content. Download now. Related titles. Carousel Previous Carousel Next. Jump to Page. Search inside document. The following are some of cases where one party paid to another in the form of Royalty: 1. Excess working It refers to the amount by which the actual royalty exceeds the minimum rent.
Lokesh Sharma. Rehan Rauf. Taufik Rizkiandi. Bharathk Kld. Nitesh Kotian. Icarus Builders And Developers Pvt. Ayesha Gupta. Avinash Bahadur. Kulwant Singh. Shrikant Mahajan. Nayan Malde. Robert Henson. Echo Claros. Anonymous Pav3RsbF. Boobalan R. More From Javed Khan. Javed Khan. Saurav Negi. Arpit Verma. Nayab Awan. Popular in Landlord. So, when the royalty is in excess of the minimum rent is called the right of recoupment of shortworkings.
Right of recoupment will be decided for the fixed period or for the floating period. When the right of recoupment is fixed for the certain starting years from the date of royalty agreement, it is said to be fixed or restricted. On the other hand, when the lessee is eligible to recoup the shortworkings in next 2 or 3 years from the year of its commencement, it is said to be floating.
An Extra payment in addition to royalty, if any, paid by lessee to lessor is called Lease premium and will be treated as capital expenditure and it will be written off on yearly basis through profit and loss account as per the suitable method. If there is an applicability of TDS Tax deducted at source as per Income Tax Act, lessee will make the payment to lessor after deducting TDS as per applicable rate and lessee is liable to deposit it to the credit of Central Government.
Amount of royalty will be gross amount of royalty inclusive of TDS , that will be charged to profit and loss account. Amount of royalty charge to profit and loss account will be Rs. Sometime, there may be stoppage of work due to conditions beyond control like strike, flood, etc. Sometime, landlord or lessor allows lessee to sublet some part of the mine or land as a sub-lessee. In this case, lessee will become lessor for sub lessee and lessee for main landlord. Output for the first four years of the lease was 40,, 65,, 1,05,, and 90, tons respectively.
Manish Gupta. Blair Cook. Therefore, a claim by any party on the land will include the fixture though financed by another party. Therefore, a disclaimer from the landlord over the fixture needs to be taken. Stolen goods like machinery are difficult for the financier to ascertain. The financier will also lose its right over the machinery. This may not happen in cases where there is a registration body, for example, the Jabatan Pengangkutan Jalan for motor vehicles. The FIS is a system which tracks stolen goods or goods seized by customs.
The hirer may not have insured the goods. It does not set down any licensing requirements but provides for the regulation of hire-purchase activities relating to scheduled goods. According to Section 2 of the Hire-Purchase Act, hire-purchase includes a letting of goods with an option to purchase and an agreement for the purchase of goods by instalments whether the agreement describes the instalments as rent or as hire or as otherwise , but does not include any agreement: a Whereby the property in the goods passes at the time of the agreement or upon or at anytime before delivery of the goods; or b Under which the person by whom the goods are being hired or purchased is a person who is engaged in the trade or business of selling goods of the same nature or description as the goods comprised in the agreement.
Based on the above, subsection a seeks to exclude outright sale ownership transfers to buyer upon sale. Likewise, a dealer cannot finance his stock under hire-purchase as the owner and hirer cannot be the same person. Only the following goods can be bought on hire-purchase. For example, the hirer wants a 3-ton lorry to be financed under hire-purchase. However, all other provisions of the Hire-Purchase Act can be included in the agreement.
Students are to note that this manual refers mainly to goods under the Hire-Purchase Act 1. The cost of the insurance is to be borne by the hirer. For hiring periods in respect of motor vehicles, the hirer shall at his or her expense, insure the vehicle immediately following the first year in the name of the hirer. Where the hirer has failed to renew the policy of insurance, the financier shall be at liberty to insure the motor vehicle and any costs thereby incurred shall be borne by the hirer.
A financier cannot request or compel the hirer to insure any risks with any particular registered insurer. Where the print size of the font is less than 10 points times 72 points being one inch large , it is not considered as to be in writing. A hire-purchase agreement must be signed by or on behalf of all parties to the agreement. However, the financier, dealer, agent or person acting on behalf of the financier must not request an intending hirer or agent to sign a hire-purchase agreement or other form or document relating to the hire-purchase agreement unless such document is duly completed or filled in.
A hire-purchase agreement that does not comply with the above shall be void. What are the details that must be stated in a hire-purchase agreement? Please see reference to a sample hire-purchase agreement below.
Cash price — the price at which at the time of signing the agreement the hirer might have purchased the goods for cash [Please see III i ] Deposit — the amount paid by deposit [Please see III ii ] Freight or delivery charges if any — the amount included in the total amount payable to cover the expense of delivering the goods to the hirer [Please see III iii ] Vehicle registration fees — any amount included in the total amount payable to cover vehicle registration fees in respect of the goods [Please see III iv ] Insurance — any amount included in the total amount, payable for insurance in respect of the goods.
The term charges need firstly be computed. The term charges shall be calculated in accordance with the formula set out in the Sixth Schedule of the Act. However in hire-purchase, it is customary to state the financing charges, not as a fraction of the outstanding balances, but as a percent of the original cash price of the asset. That percent is called add-on rate of interest. The remaining term charges that are not recognised as earned will be the amount to be rebated.
He wants to settle the entire loan early settlement. Where the negotiation is successful, the prospective hirer will submit his or her supporting documents to the financier for the approval of a hire-purchase facility or loan. The financier may require the prospective hirer to furnish a guarantor to guarantee the performance of the prospective hirer under the hire-purchase agreement. Once the hire-purchase facility is approved, the financier will send a letter of undertaking to the dealer to inform him of the approved hire-purchase facility.
The parties related to the hire-purchase agreement will then be required to sign and enter into the agreement. Within 14 days after the making of the hire-purchase agreement, the financier must serve on the hirer and the guarantors a copy of the agreement each, failing which would render the hire- purchase agreement unenforceable by the financier.
The document required to be served on the hirer and guarantors may be served by delivering it to them personally or by posting it by registered post addressed to the last known place of abode or business. When the borrower defaults on repayment, the hirer will use agents to repossess the hired goods in most instances; motor vehicles and then charges repossession fees and storage fees if the borrower takes time to settle the repayment due and collects his goods late. Under the Act and regulations, there is no schedule of fees, which the borrower may refer to, so as to ensure the fees charged are reasonable and allowable under the law.
Vehicles plying between border areas and security areas are prime suspects for smuggling and other unlawful activities. These vehicles may be detained for long periods of time pending investigations.
Such detention makes it difficult for the owner to repossess the vehicle. The premises are locked thereby preventing access. Even if access were possible, entry into the premises would result in trespassing. Repossessors may avoid repossessing a vehicle for fear of encountering an attack. The vehicle could be used in a remote place like a land development scheme, e. FELDA scheme where the number plate is removed. Repossessors may have difficulty locating the vehicle. The hirer absconds.
The financier will have no other recourse than to institute legal action for recovery. The repossessors appointed by the financier can sometimes be high-handed in their approach. This can cause a bad image to the financier. A Code of Ethics has been drawn up for repossessors to abide by. For example, the repossessor should be properly attired and approach the hirer in a professional manner.
He must be cognizant of the laws like trespassing and breaking in. At the same time, the financier would need to check the credibility of the dealer.
Exceptions are given for creditworthy borrowers. Therefore, a financier cannot know if a particular machine had been financed by another financier. This can lead to double financing. In the event of legal action, the first financier has legal right over the equipment.
Though it is the duty of the hirer to cover insurance, the financier should follow up to ensure the vehicle is insured. This is to prevent cases of fictitious hirers being created by the dealers. This is applicable for scheduled collections. Caution should be exercised with dealers who submit a high number of defaulting borrowers. Leasing The transaction of lease is generically an asset-renting transaction. In other words, the financier buys the assets and rents it out for a fee paid in instalments.
Lessee 4. Delivery of equipment Equipment supplier plier t 5. Payment of su p asse rental 1. Signed by both parties nt nt ipme ip me qu qu Lease agreement t toe ofE n le ayme. Tit 2 3. P Lessor Figure Anyone can be a lessor, and anyone can be a lessee, subject to the usual conditions as to competence to contract, or holding of properties. Virtually any movable asset can be leased.
However, for easy reference the main items of equipment for leasing are categorised by some leasing companies as follows: 1 Computers and IT-related; 2 Office equipment; 3 Industrial and manufacturing equipment; 4 Commercial and private vehicles; 5 Construction and heavy equipment; 6 Medical equipment; 7 Material handling equipment; and 8 Others — garage equipment, photography equipment, etc.
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