Go AD-Free with CAclubindia PRO for Rs 167/Month Only. Subscribe Now!

claiming of input credit

ITC / Input 101 views 1 replies

Satish Kavitake

395 Points Joined January 2018

Case A

A Proprietary firm purchased Machinery with GST and given to partnership firm for use by way of becoming 50% partner in the firm
And accordingly, he receives share in profit as well as remuneration from firm

In such case,how owner of proprietary firm can claim input credit of GST paid on purchases of machinery

case B
A proprietary firm has purchased Machinery and given to partnership on rental basis

In such case,how owner of proprietary firm can claim input credit of GST paid on purchases of machinery

Pl advise

Replies (1)

Sundararajan S

Final Student of ICAI

1764 Points Joined December 2015

In case A the proprietor can transfer the credit to partnership. You have not mentioned as to whether it's partly used for proprietary use as well. So in the absence of part use, the proprietary concern if transferred as a going concern, then the partnership can take remaining credit for remaining useful life of asset. please refer to relevant rules on ITC in this regard. However, if not transferred as a going concern and simply the asset is transferred there without use by proprietor it will not be prudent for the proprietor to take credit.

In case B, yes if machinery is rented out, credit can be taken fully.

But please refer to the notification stating rates for renting out. If in the notification it has been stated that there is no ITC for such machinery then ITC should not be taken. So please be clear for what machine you are taking credit and the notification stating rates.