23 March 2008
Hello, The company has installed 12 fixed lines (base telephones)from Bsnl,Mtnl etc. These telephones are installed at the address of the directors residences some of these connections are taken in the name of the directors of the company. Company has availed cenvat of service tax on these telephones bills paid by the company moreover Dept. opposed to disallow cenvat avail on the bills 1- which are not in the name of the company 2- which are in the name of the company but have the address of the residence of the directors of the company. simmiliar sitituation arise in the case of the mobile phones which in the name of the Director and having the add. of the factory and which r in the name of the company but having the add of the residence of the director . Moreover Company has shown the residence of director as purchase office/sale office for the purpose of convienence, being away from the main city although no rent is being paid by the company for the same to the directors. i would request to u plz advice whether the company is eligible to avail the benifit of cenvat of service tax paid on the telephones/ mobile phones if yes plz give the reference of any decided case laws or notification Thanks
23 March 2008
co. is eligible for cenvat credit. because fact is ,actual use matters. there happened cases where credit is allowed in the similar cases like u have.
24 March 2008
yes, the company can claimed cenvat credit as the phones r used for the company purpose.but as far as depatment audit is concerned in most of the cases they dont allowed as cenvat credit.
01 April 2008
hello sir, plz give the legal authentication like decided case laws ,circulars and notifications because we already got the notice for the same.
03 April 2008
The credit is likely to be disallowed.
There is a recent judgment which clarifies that telephone lines installed at a place other than the place of business and even if the payment is made by the company it stands to be disallowed.
You may cross check, that these expenses are subject to FBT, which means the telephone is a benefit given to the employee under an arrangment and is nothing but a cost of his CTC.
Any expense which is for the employee, though he is related to the organisation in any manner, will not be allowed, since it is not an expense in relation to the busines.
It is difficult to justify that cause for the reasons that it has personal calls associated to it.
Not allowed as input credit, is the view that I can express in the instance case
CAclubindia
