ITC of input/input service used for construction of warehouse allowed if construction is not capitalized in books: AAR

The applicant is stated to be engaged primarily in the business of manufacturing of pneumatic rock drills, jack hammers, equipment, spare parts and accessories used in mining/construction industry.

The applicant submits that as a part of its business expansion plan, it decided to construct warehouse / godown at Village Mollarber, Post Office-Dankuni Coal Complex, Durgapur Expressway, P.S. Dankuni, Hooghly, West Bengal-712310, with sole intention to provide the same on rent. Accordingly, the applicant has constructed one warehouse and let it out to “Zomato Hyperpure Private Limited” and has been paying tax on such supply.

The applicant has made this application under sub section (1) of section 97 of the GST Act and the rules made there under raising following questions vide serial number 14 of the application in FORM GST ARA-01: (i) Whether input tax credit (in brevity “ITC”) against inward supply of said input/input service used for construction of warehouse can be claimed and utilized to pay tax on the outward supply of services provided by way of renting of said warehouse in case such construction expenses are capitalized in books? (ii) Whether input tax credit (in brevity “ITC”) against inward supply of said input/input service used for construction of warehouse can be claimed and utilized to pay tax on the outward supply of services provided by way of renting of said warehouse in case such construction expenses are not capitalized in books?

Advance Ruling

Question: Whether input tax credit against inward supply of input/input service used for construction of warehouse can be claimed and utilized to pay tax on the outward supply of services provided by way of renting of said warehouse in case such construction expenses are capitalized in books?

Answer: The applicant is not eligible for input tax credit in such cases.

Question: Whether input tax credit against inward supply of input/input service used for construction of warehouse can be claimed and utilized to pay tax on the outward supply of services provided by way of renting of said warehouse in case such construction expenses are not capitalized in books?

Answer: Input tax credit is admissible if such construction expenses are not capitalized in books.