TaxTMI 
TaxTMI 
2020 (9) TMI 1250
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....has constructed 50000 Sq. Feet of Logistic Facility Space (warehouse) in Haryana and would be constructing additional 3,50,000 Sq. feet more. A company engaged in manufacturing and trading of 2 wheelers was interested in leasing of the space and has entered in contract with the Appellant. The proposed contract requires the Applicant to undertake:- a.) To create multilevel storage facility with fabricated sheets fixed on the nuts and bolts as requirement of the Lessee for storage of two wheelers in the warehouse; b.) To provide to the Lessee the loading and unloading ramps for the vehicles as per standards of Lessee; c.) To provide full electricity backup at the premises at all times for which the Applicant has installed a generator with required load capacity and shall also be responsible for the upkeep and maintenance of the generator (including the fuel); d.) To maintain the premises inclusive of service-lift and other electrical equipment on its own cost in good condition, including cleaning and housekeeping. Question for Advance Ruling: Appellant had raised the following questions for Advance Ruling before the Authority for Advance R....
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.... on the reasoning that without the use of these items storage and warehousing services could not be provided. 5. In their case the warehouse is not being constructed on the Appellant's own account. The warehouse has been constructed as per the requirement of the lessee. The Agreement has been entered into with a single party for 5 years. There is no alternative use of the warehouse. (Thus Section 17(5)(d) is not attracted). For ready reference, Section 17(5)(d) is being reproduced here:- "(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub- section (1) of section 18, input tax credit shall not be available in respect of the following, namely:- (a) .... (b) .... (c) .... (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....
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....ess vs. CIT [(2001) 3 SCCC 359]. 15. In K P Verghese vs. Income Tax Officer [Vol. 131 (1981) ITR 597] it has been held that literal interpretation in certain cases lead to absurd interpretation. 16. That, accordingly, the restriction of Section 17(5)(d) is not applicable to the Appellant's case. 17. The Appellant has heavily relied on the Orrisa High Court's decision in Safari Retreats. The facts are similar to their case. 18. That, thus, the AAR has violated the judicial discipline. 19. The Bombay High Court has, in CIT Vidarbha vs. Godavari Devi Saraf, held that law laid down by the High Court, even in it is of a different state, ought to be respected. 20. In CCE vs. Valson Dyeing Bleaching and Printing Works [2010 (259) ELT 33 (Bom.)] the Bombay High Court had upheld the Tribunal decision wherein Tribunal had followed a decision of Madras High Court treating as binding. In this case the Tribunal had no jurisdiction to examine the validity of Notification 42/98 but relying on Madras High Court decision the Tribunal held that the notification was ultra vires the provisions of the Act. 21. In Panipat Coop Sugar Mills 2013 (293) ELT 66 (Tri-Del.) the ....
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....y GST on the lease rentals; 2. That, they are registered and duly entitled to the ITC of inputs/ services and capital goods; 3. Section 17(5)(d) excludes the following from admissibility of ITC: - "(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 capitalisation, to the said immovable property; The Explanation to sub-Section 17(5) is also relevant and is reproduced below: - Explanation.- For the purposes of this Chapter and Chapter VI, the expression "plant and machinery" means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes,- (i) land, building or any other civil structures; ....
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....f appeal are that the restriction imposed under Section 17(5)(d) doesn't come in the way of admissibility of the Input Tax Credit since the same applies only where a construction of immovable property is in one's "own account". And, there's being a construction specifically oriented towards further leasing out of the premises, the ITC shall be admissible in accordance with the Hon'ble Orrisa High Court's decision and this decision is binding on the lower appellate authorities, despite it having been passed by a High Court of difference jurisdiction. Legal Position The legislative intent is abundantly clear from Section 17(5)(d) which is reproduced here again for ready reference:- "(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,- constructional includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable ....