Credit on capital goods – Is eligibility based on date of receipt of capital goods? Why not make changes in the budget?
The budget is just a fortnight away. If you are manufacturing goods, don’t buy any capital goods now. Assuming that you buy a machine today for use in manufacture of exempted goods – naturally you cannot take credit, but if the exemption is withdrawn with effect from 1.3.2007, can you take credit?
The Tribunal in Surya Roshini had held that credit is subject to eligibility at the time of receipt of the Capital goods. The party’s appeal to Supreme Court was dismissed. But another bench of the Tribunal had in Ace Timez case held that credit has to be allowed. Because of the conflicting judgements, the Mumbai bench has now referred the matter to a Larger Bench.
This budget may be a good opportunity for the government to clarify the issue and amend the rules retrospectively so that credit may be allowed say for a period of three years. When inputs lying in stock can get credit, why not capital goods?