Yes, ITC is available on VRF AC provided:

• It is used for business,

• It is not capitalised as part of building construction,

• It is not for personal use.

Can you give me any case law/ ruling

Yes — there are case laws and advance rulings directly relevant to ITC on ACs / HVAC / VRF systems.
Here are the most useful ones you can cite:

✅ 1. JEANS KNIT PRIVATE LIMITED

AAR – Tamil Nadu
Order No.: TN/24/AAR/2020
Date: 20.05.2020

Key point:

The Authority held that Input Tax Credit is allowed on Air-Conditioners and Cooling Systems installed in factory premises, because they fall under “plant & machinery” and are NOT part of immovable property.

👉 Very strong ruling in favor of ITC on ACs / VRF-type systems.

✅ 2. Spenomatic India Pvt Ltd

AAR – Karnataka
Order dated: 17.09.2020

Held:

AC systems and HVAC equipment used in manufacturing or business premises are eligible for ITC because they are not part of construction of immovable property, but capital goods used for business.

✅ 3. Tarun Realtors Pvt Ltd

AAAR – Maharashtra
Date: 24.11.2021

Held:

HVAC & VRV/VRF systems embedded in civil structure (i.e., part of building construction) → ITC BLOCKED u/s 17(5)(c)/(d).

But if AC/VRF is not capitalised as immovable property, ITC is allowed.

👉 This ruling is important because it makes a clear distinction:

• If VRF is part of construction → No ITC

• If VRF is an independent business asset (plant & machinery) → ITC allowed

✅ 4. Wolkem India Pvt Ltd

AAAR – Rajasthan
Date: 22.03.2019

Held:

HVAC, cooling machinery, and ventilation systems installed in a factory qualify as Plant & Machinery → ITC allowed.

📌 What these rulings collectively establish

✔ ITC allowed when:

• VRF/VRV ACs are used for business

• Installed in offices/factories/shops/warehouses

• Treated as plant & machinery

• Not capitalised as part of building construction

❌ ITC not allowed when:

• VRF AC is installed during building construction and is embedded into the immovable property

• Or capitalised as “building” instead of “plant & machinery”

✅ Best ruling for your case (most cited)

JEANS KNIT PVT LTD (Tamil Nadu AAR)

Very clear language that ITC is eligible on ACs used in business and treated as plant & machinery.