2014 (7) TMI 397

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....red on the residential premises. The adjudicating authority denied the credit of Rs. 94,443/- for the period February 2009 to August 2010 on the ground that the expenses incurred by the appellants has no connection with the manufacturing activity. Commissioner (Appeals) upheld the adjudication order. 3. The learned counsel submits that the Hon'ble Andhra Pradesh High Court in the case of CCE Vs. M/s. ITC Ltd. rejected the appeal filed by the Revenue on the identical issue. He particularly drew the attention of the Bench para 9 of the judgment. It is submitted that in the present case also the appellant's factory is situated in a remote place and the maintenance and repair service on residential colony is an obligatory activity of....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....w:-     9. The Commissioner's Order-in-Appeal dated 27.05.2008 reflects that he accepted that the efficiency of the employees of an organization would be dependent on various factors, one such being the provision of a housing colony. He further conceded that these facilities would contribute to the enhancement of the productivity of the organization. Having stated so, the appellate authority surprisingly too- the view that maintenance of the residential colony by the respondent Company was only an obligatory activity owing to situational exigencies and was not connected either directly or indirectly to the manufacture of its final products! This inherent contradiction in the Order-in-Appeal was noted by the CESTAT, whi....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....lfare activity underta-en while carrying on the business and such an expenditure may be allowable under the Income Tax Act. However, to qualify as an input service, the activity must have nexus with the business of the assessee. The expression 'relating to business' in Rule 2(1) of CENVAT Credit Rules, 2004 refers to activities which are integrally related to the business activity of the assessee and not welfare activities underta-en by the assessee.     9. Applying the ratio laid down by the Hon'ble Apex Court in the case of Maruti Suzu-i Limited v. Commissioner of Central Excise, Delhi (supra), we hold that unless the nexus is established between the services rendered and the business carried on by the assess....