58 Determination of sale price and of purchase price in respect of sale by transfer of property in goods

58. Determinationofsale price and ofpurchaseprice inrespectofsale by transferofpropertyingoods (whetherasgood orinsome otherform) involvedin the executionofa workscontract.-

(1)The value ofthe goods at the time ofthe transferofpropertyinthe goods (whetherasgoods orinsome other form) involvedinthe executionof

a works contractmay be determinedby effecting thefollowingdeductions fromthe value ofthe entire contract,insofaras the amounts

relatingto the deductionpertainto the said works contract:

(a) labour, service tax collected separately and service charges for the executionofthe works ......;

(b)amountspaid by way ofprice for sub-contract,ifany, to sub-contractors;

(c)charges forplanning,designingand architectsfees

(d)charges forobtainingon hire orotherwise,machineryandtools for the executionofthe works contract;

(e)cost ofconsumablessuch aswater, electricity,fuel used inthe execution of works contract, the property in which is nottransferred in the course ofexecutionofthe works contract

(f) cost of establishment of the contractorto the extenttowhich itisrelatabletosupplyofthe said labour and service

(g) other similarexpensesrelatabletothe said supplyoflabourand services,where the labour and servicesaresubsequenttothe said transferof property;

(h) profit earnedbythe contractortothe extent itisrelatabletothe supplyofsaid labour and services:

Providedthat where the contractorhas not maintainedaccountswhich enableaproperevaluationofthe differentdeductionsasabove orwherethe Commissionerfinds that the accountsmaintainedbythe contractorarenot sufficientlyclear orintelligible,the contractoror,as the case may be, the Commissionermay inlieu ofthe deductionsas above providealump sum deductionasprovidedinthe Table below and determineaccordinglythe sale price ofthe goods atthe time ofthe said transferofproperty.

TABLE

Note :Thepercentageistobeappliedafter firstdeductingfromthetotalcontractprice, the cost of land determined under sub-rule (1A) and then the quantumofprice onwhichtaxispaid bythe sub-contractor,ifany, and thequantumoftaxseparatelychargedbythe contractorifthe contractprovidesforseparatechargingoftax.

1A) In case ofaconstruction contract,wherealongwiththe immovableproperty,the land or, asthe case may be, interestinthe land, underlyingthe immovablepropertyistobeconveyed,and thepropertyin the goods (whetheras goods or in some other form) involved in the execution of the construction contract is alsotransferredtothe purchaser such transferisliable totax underthisrule. The value ofthe said goods at the time ofthe transfershall be calculatedafter deduction of the costofthe land from the total agreementvalue.

The cost ofthe land shall bedeterminedinaccordancewith the guidelinesappendedtothe AnnualStatementofRates preparedunderthe provisionsofthe Bombay Stamp (DeterminationofTrue Market Value of Property)Rules, 1995, asapplicableonthe 1stJanuary ofthe year inwhichthe agreementtosell the propertyisregistered:

Providedthat,deductiontowardscostofland underthis sub-ruleshall not exceed 70%ofthe agreementvalue.

Provided that, after payment of tax on the value of goods determined as per this rule, it shall be open to the dealer to prove before the department of town planning and valuation that the actual cost of the land is higher than that determined in accordance with the annual statement of rates (including guidelines) prepared under the provisons of the bombay stamp (Determination of true market value of property) Rules, 1995. On such actual cost being proved to higer than the annual statement of rates, the actual cost of the land will be deducted and excess tax paid, if any, shall be refunded.

1B) (a) Where the dealer undertakes the construction of flats, dwellings, buildings or premises and transfers them in pursuance of an agreement along with the land or interest underlying the land then, after deductions under sub-rule (1) and (1A) from the total contract price shall be detemined after applying the percentage provided in column 3 of the following table depending upon the stage at which the purchaser entered into the contract.

(b) For determinig the value of goods as per the table of clause A, it shall be necessary for the dealer to furnish a certficate from the local or planning authority certifying the date of completion of the stages referred above and where such authority does not have a procedure for providing such certificate from a registered RCC consultant.

1C) If the dealer fails to establish the stage during which the agreement with the purchaser is entered, then the entire value of goods as determined after deductions under sub-rules (1) and (1A) fromthe value of the entire contract, shall be taxable.

(2) The value ofgoods soarrivedat undersub-rule(1) and (1A) or as the case may be, under sub-rule (1B)shall, forthe purposesoflevy oftax, bethe sale price or,asthe case may be,the purchase price relating to the transferof property in goods (whetheras goods orinsome other form) involvedinthe executionofaworks contract.