QUESTION
We had taken the a floor on rent
for our office. After that we have incurred various expenses on this premises
and capitalized these expenses into the books under respective heads like
furniture & fixture, electric equipment, building etc. Nature of the expenses
are:
1. Flooring work with tiles
2. Electric fitting (Material and Labour)
3.Alluminium Cabinet
4.Wooden Cabinet
5. Centralized AC
Now my query is whether Input Tax Credits against these expenses is blocked u/s
17(5) or only up to the amount capitalized under the head building is blocked?
law.
ANSWER
Facts of the case:
Floor is
taken on rent for Office. various expenses are incurred such as flooring,
electric fitting, aluminum/wooden cabinet, Centralized AC, and the same is
capitalized in books under different heads. Whether ITC is eligible for these
expenses?
Law Applicable:
SECTION 17
OF CGST ACT
(5) Notwithstanding anything contained in sub-section (1) of section 16 and
subsection (1) of section 18, input tax credit shall not be available in respect
of the following, namely:-
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(d) goods or services or both received by a taxable person for construction of
an immovable property (other than plant or machinery) on his own account
including when such goods or services or both are used in the course or
furtherance of business.
Explanation. ''For the purposes of clauses (c) and (d), the expression
'construction' includes re-construction, renovation, additions or alterations or
repairs, to the extent of capitalization, to the said immovable property;
Interpretation:
As per
section 17(5) ITC of construction of immovable property is blocked but that of
repair is allowed if is not capitalized.
In this case, it is capitalized, so credit is not available.
So far as Aluminum cabinet is concerned, if it is not a part of building, then
ITC can be claimed. However, ITC on Wooden cabinets (furniture), electric
fittings and indoor unit and outdoor unit of AC is available.
Conclusion:
ITC on
Construction to the extent of capitalization is blocked. But ITC on Wooden
cabinets (furniture), electric fittings and indoor unit and outdoor unit of AC
is available.
ITC of aluminum cabites is available if it does not form part of building.(Reply
dt.29.10.2020)