Transfer of machinery between deemed distinct person.

[Kanishk Manglik]

Respected faculty,

i have encountered a small issue regarding transfer of machinery between deemed distinct persons. I have a machinery in my Delhi factory and i want to sell it. I have no ITC available in my Delhi GST no while i have a sufficient ITC amount in my Noida GST no.

Query 1 : Now i was wondering if i could transfer the machinery from my Delhi unit to Noida unit at a nominal value of say 1 Lakh taking advantage of Rule 28 under GST act as both the units are under GST and invoice value can be market value. Later on i can sell it at market value say 25 L and avail the benefit of GST input available in my Noida GST no to pay the liability.

Query 2 : Will it effect depreciation and any other provision of income tax .

Hope i am able to convey the query properly.

Thank You

AI Summary

GST on intra entity transfers: pay tax on the adopted transfer value; recipient may claim ITC and use it on resale.
Transfer between units treated as deemed distinct persons attracts GST on the adopted transfer value; Rule 28 may be used to determine market/transaction value. The transferring unit pays GST, and the receiving unit can avail that GST as input tax credit and use it when selling to an unrelated third party. For income tax, if the receiving unit avails ITC for the tax component, that tax cannot be included in the depreciable base; claiming depreciation on it requires reversal of the credit with interest.