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During the course of constructing an administrative building, the Applicant had incurred various expenses such as central air conditioning plant, locker cabinet, lift, electrical fittings, architect, interior designing, etc. In respect thereto, the Applicant had filed an application before the Gujarat AAR to ascertain whether it is entitled to avail ITC (‘ITC’) on the said expenses.
It was observed by the AAR that the air conditioning plant, lift, electrical fittings, roof solar plant and fire safety extinguishers qualify as immovable property as these items cannot be shifted from one place to another without damaging them. Accordingly, ITC is not available on such expenses u/s. 17(5) of the CGST Act, being in relation to immovable property.
As for the architect and interior designing service, it had been held that ITC is also not available as these are procured for construction of new building irrespective of their booking as revenue or capital expenditure. The AAR allowed ITC on locker cabinet and generator as they are movable goods and not restricted under Section 17(5) of the CGST Act.
The Varachha Co-Operative Bank Limited [Advance Ruling No. GUJ/GAAR/R/37/2021]
It would be pertinent to note that Section 17(5) of the CGST Act restricts ITC on immovable property other than Plant and Machinery. It is to be noted that Air conditioning plant, lift, electrical fittings, etc may qualify as ‘Plant and Machinery’ under Explanation to the said provision. The Rajasthan AAR in the case of Rambagh Palace Hotels Private Limited [2019-TIOL-155-AAR-GST] had allowed ITC on electrical fittings, etc. to the extent of capitalization.
The information provided in this update is intended for informational purposes only and does not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. This update is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial/ quasi judicial authorities may not take a position contrary to the views mentioned hereinrra quis.
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