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Input credit on hp goods
is it possible to claim input tax credit on goods which s under hypothication.
for ex. a person engaged in transport business bought a new car in loan from a bank. can he claim IT credit in this scenario. cos one of the nbfc claims that they r d legal owner till payment of dues and hirer can claim IT credit only after paying last emi... is this correct?
Replies (1)
Dear Guhan,
You can definately claim Input tax Credit on Goods Purchased under Hypothication. Transactions under Hypothication Sysrem (Under Hire Purchase/Lease Transaction) are treated as Deemed Sales under Article 266 (29A) of Constitution of India. According to this article sale under hypothication system is deemed to be normal sales & the provisions of tax apply to it as they apply to normal sales. In such transactions buyer is the only & real owner & NBFC is just financer. So in my opinion you can definately claim Input Credit.
Regards: -
CA Harshal Pahade
Contact: - 9272344759
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