Functionality test for plant determines whether buildings qualify for input tax credit in leasing or rental services. The availability of input tax credit for goods and services used in constructing immovable property depends on a factual functionality test to determine whether the building qualifies as a plant or machinery. If a building is planned and constructed to meet an assessee's special technical requirements, it may be treated as a plant and eligible for ITC against supplies such as renting or leasing; if construction is for the recipient's own use the input chain is broken and ITC is not available. The Court remitted factual determination to the High Court and noted a proposed retrospective amendment replacing 'plant or machinery' with 'plant and machinery'.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Functionality test for plant determines whether buildings qualify for input tax credit in leasing or rental services.
The availability of input tax credit for goods and services used in constructing immovable property depends on a factual functionality test to determine whether the building qualifies as a plant or machinery. If a building is planned and constructed to meet an assessee's special technical requirements, it may be treated as a plant and eligible for ITC against supplies such as renting or leasing; if construction is for the recipient's own use the input chain is broken and ITC is not available. The Court remitted factual determination to the High Court and noted a proposed retrospective amendment replacing "plant or machinery" with "plant and machinery".
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