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TMI Blog2023 (8) TMI 1200X X X X Extracts X X X X X X X X Extracts X X X X ..... advance ruling have changed. 4. In terms of Section 104 of the Act, where the Authority finds that advance ruling pronounced by it under sub-section (4) of Section 98 or under sub-section (1) of section 101 has been obtained by the applicant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the applicant as if such ruling had never been made. 5. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act. M/s J.K. FENNER (INDIA) LIMITED having their Project office at No. 3, Melakal Road, Kochadai, Madurai - 625 016 (hereinafter called the 'Applicant') are registered under the GST Act with GSTIN 33AAACJ7230N1ZJ. They have sought Advance Ruling on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nput tax credit shall not be available in respect of the following, namely:- .... (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. 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 capitalization, to the said immovable property; 2.5 In view of above facts, input tax credit (ITC) in general is not available for construction, reconstruction, renovation, addition, alteration or repair of an immovable property even when such goods or services or both are used in the course or furtherance of business. However, the limitation in such a scenario is to the extent of capitalization. 2.6 Going by the explanation, the Applicant has contended that, with Section 17(5) s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of such AMCs. The applicant was asked to furnish the following documents:- (i) Detailed write up on accounting of the cost of repairs incurred on the factory repairs and subsequent asset value arrival for the factory. (ii) Accounting standards in respect of repairs and that of the factory. (iii) P & L /balance sheet for the period before and after repairs. 4.2 In response to that, the applicant submitted the following documents:- 1) Write -up on Capital Vs Revenue nature of expenses accounting. 2) Sample accounting document for Capital nature of Civil expenses-Annexure-1 3) Sample accounting document for Revenue nature of Civil expenses-Annexure-2 4) P&L for both nature of expenses for 2 months (2022-23) -Annexure-3 4.3 In the write up, the Applicant has contended that,- a) Initial Cost of Recognition as Fixed Asset as per hid AS 16 PPE (Property, Plant & Equipment). This includes PPE besides all Civil Works which are considered as Project Cost. b) An Asset can be capitalized if probable further economic benefit associated with the asset will flow to entity. The economic benefit can flow either directly / indirectly. c) Once project is commissioned thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work results in addition of area, the cost will be added to the Fixed Assets i.e., capitalized in the books of accounts (Balance Sheet) as per accepted accounting principles. 5.0 We have carefully examined the statement of facts, supporting documents/photographs filed by the Applicant along with application, submissions made at the time of Personal hearing and the comments of the Central/State Jurisdictional Authority. 5.1 The Applicant is engaged in manufacturing of transmission rubber belts, oil seals etc. in their application filed before the Authority, it has been stated that they have to constantly incur expenditure on repair and maintenance of factory buildings which are considered as crucial for continuity and seamless production. Repair works in factory building are in the nature of painting, renovation, debris removal, changing of roof etc., which is the cost incurred to ensure that the asset continues to operate. 5.2 They have also added that the amount spent on routine repairs and maintenance is charged to revenue as per accounting standards and sought ruling on the following question: 'Whether ITC is available on the works contract services used for the repair and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actual factory building or deteriorated portion of factory building to be renovated or repaired, so as to ascertain whether repair work has been carried out only for the purpose of preserving or maintaining an already existing factory building, which does not bring a new asset into existence. Moreover, asset category wise expenditure/cost incurred towards repair and maintenance could not be deciphered from the documents produced as to whether the maintenance and repair work has been carried out in the factory building or in the buildings meant for some other non-business utility. 5.7 Further, the Applicant has contended that the said expenses were recorded as revenue expenses in their books of accounts. During the personal hearing also the AR reiterated that these expenditures cannot be capitalized as per accounting standards. In support of their contention they have submitted certain data entries made in the system related to the financial year 2022-23. But, the actual treatment given to the expenditure could be deduced only after finalization of their accounts. 5.8 Therefore, we are of the view that the Applicant is entitled to ITC on the goods and services received towards re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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