Is it possible to claim Input Tax Credit (ITC) for lifts and elevators installed in office buildings?
Section 17(5)(c) and 17(5)(d) impose restrictions on claiming ITC for inputs used in
the construction of an immovable property.
According to the Explanation to Section 17(5)(d), "construction" encompasses
re-construction, renovation, additions, alterations, or repairs, limited to
capitalization on the immovable property. It is essential to note that while
the definition of "construction" is broad, it does not explicitly
include "installation."
As per the definition in section 2(119), a works contract involves various activities
related to immovable property, such as building, construction, fabrication,
completion, erection, installation, fitting out, improvement, modification,
repair, maintenance, renovation, alteration, or commissioning. Notably,
"installation, erection & fitting out" are distinct from the term
"construction" both in the legal context and common commercial usage.
Lifts are not specifically defined under the CGST Act, 2017. However, the Karnataka
Lifts, Escalators, and Passenger Conveyors Act in Section 2(j) defines a lift
as an elevator or hoisting mechanism designed to move vertically, powered and
intended for transporting passengers or goods. Importantly, the installation of
a lift is not indispensable for the functionality of a building; it provides an
optional utility at the owner's discretion. The building can operate similarly
even if lifts and elevators are removed. Consequently, lifts and elevators
cannot be considered integral to the building.
Lifts and elevators, therefore, fall under the category of "plant &
machinery."
In conclusion, it can be inferred that ITC is applicable to lifts and elevators
installed in office buildings.
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