CA Bimal Jain | Mar 23, 2021 |
ITC available on CSR expenses as in the course of business
The Hon’ble AAR, Uttar Pradesh in the matter of M/S. Dwarikesh Sugar Industries Limited [Order No. 52, dated January 22, 2020] held that expenses incurred towards Corporate Social Responsibility (“CSR”) by the Company in order to comply with requirements under the Companies Act, 2013 (“Companies Act”) qualify as being incurred in the course of business and therefore, eligible for Input Tax Credit (“ITC”) in terms of the Section 16 of the Central Goods and Services Tax Act, 2017 (“CGST Act”) .
M/s. Dwarikesh Sugar Industries Limited, (“the Applicant”) is a Company engaged in the business of manufacture and sale of sugar and allied products. In order to comply with the CSR norms in terms of Section 135 of the Companies Act, the Applicant undertakes certain activities and in order to undertake the CSR activities, the Applicant procures various goods and services on which GST is charged by the supplier.
The Hon’ble AAR, Uttar Pradesh in Order No. 52, dated January 22, 2020 held as under:
Section 16(1) of the CGST Act:
“Eligibility and conditions for taking input tax credit-
16. (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.”
Section 17(5)(c), (d) and (h) of the CGST Act:
“Apportionment of credit and blocked credits-
(c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service;
(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.
(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and
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;”
DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.
In case of any Doubt regarding Membership you can mail us at [email protected]
Join Studycafe's WhatsApp Group or Telegram Channel for Latest Updates on Government Job, Sarkari Naukri, Private Jobs, Income Tax, GST, Companies Act, Judgements and CA, CS, ICWA, and MUCH MORE!"