ITC ON CAPITAL GOODS FOR CONSTRUCTION OF BLDG

[NAMAN DOKANIA]

Can an assessee take ITC on Capital Goods used for constuction of building as well as interior furniture, if the property so construction is used for renting purposes.

1. CAse 1: Renting of Rooms like a Hotel

2. Case 2: Renting of Banquet Hall for marriage purposes.

Your opinion is highly recommended.

[Shilpi Jain]

Credit will not be eligible to the extent of capitalisation to the building. The interior furniture would generally be movable and would be capitalised under furniture and fixtures. Credit should be eligible for this as it would not fall under sec 17 restriction.

CG specifically used for construction of building would not be eligible unless you wish to follow the decision given in the case of Safari Retreats, which is now pending before the SC.

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shilphi Jain.

[KASTURI SETHI]

In this scenario, ITC is not allowed.

[Himansu Sekhar]

No ITC is allowed. It is barred by sec 17(5).

AI Summary

Input tax credit on capital goods: disallowed for building construction; movable furniture generally eligible for credit.
Credit is not available for capital goods capitalised to the building; immovable construction-related capitalisation does not attract ITC. By contrast, movable interior furniture and fixtures capitalised under furniture and fittings are generally regarded as eligible for Input Tax Credit because they are not subject to the capitalisation restriction, although an alternate position invoking section 17(5) and a pending contrary authority are noted.