58. Determination of sale  price  and  of purchase price  in respect of sale  by  transfer of property in goods  (whether as good  or in some  other form)  involved in  the  execution of a  works contract.-

(1) The value of the goods at the time of the transfer of property in the  goods (whether as goods or in some other form) involved in the execution of

a  works contract may be determined by effecting the following deductions  from the  value  of the entire contract, in so far as the  amounts

relating to the deduction pertain to  the  said  works  contract:

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

(b) amounts paid by way of price for sub-contract,if any, to sub-contractors;

(c) charges for planning, designing and  architects fees

(d) charges  for obtaining on  hire  or otherwise, machinery and tools  for  the  execution of the  works  contract;

(e) cost  of consumables such  as water,  electricity, fuel  used  in the  execution  of  works   contract,  the  property  in  which  is  not transferred  in  the  course  of execution of the  works  contract

(f) cost  of  establishment  of  the  contractor to  the  extent to which  it is relatable to supply of the  said  labour  and  service

(g)  other  similar expenses relatable to the  said  supply of labour and  services, where  the  labour  and  services are subsequent to the  said transfer of  property;

  (h)   profit  earned by the  contractor to the  extent  it is relatable to the  supply of said  labour  and  services:

Provided that  where  the  contractor has  not  maintained accounts which  enable a proper evaluation of the  different deductions as above or where the  Commissioner finds  that  the  accounts maintained by the contractor are not  sufficiently clear  or intelligible, the  contractor or, as the  case  may  be,  the  Commissioner may  in lieu  of the  deductions as above  provide a lump  sum  deduction as provided in the  Table  below  and  determine accordingly the  sale  price  of the  goods  at the  time  of the  said  transfer of property.

TABLE

Note :The percentage is to be applied after  first deducting from the total contract price, the cost of land determined under sub-rule (1A) and then the  quantum of price  on which tax is paid  by the sub-contractor, if any,  and  the quantum of tax separately charged by the contractor if the  contract provides for separate charging of tax.

1A) In  case  of a construction contract, where alongwith the immovable property, the  land  or,  as the  case  may  be,  interest in the land,  underlying the  immovable property is to be conveyed, and  the property in  the  goods  (whether as  goods  or  in  some  other  form) involved  in  the  execution  of  the  construction  contract  is  also transferred to the  purchaser  such  transfer is liable  to tax  under this rule.  The  value  of the  said  goods  at  the  time  of the  transfer shall  be calculated after  deduction of  the  cost of the  land  from  the  total  agreement value.

The  cost  of the  land  shall  be determined in accordance with  the guidelines appended to the  Annual Statement of Rates  prepared under the  provisions of the  Bombay  Stamp  (Determination of True  Market Value  of  Property) Rules,  1995,  as applicable on the  1st January  of the year  in which the  agreement to sell  the  property is registered:

  Provided that, deduction towards cost of land under this  sub-rule shall  not  exceed  70% of the  agreement value.  

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  of goods  so arrived at  under sub-rule(1) and (1A) or as the case may be, under sub-rule (1B) shall,  for the  purposes of levy  of tax,  be the  sale  price  or, as the  case  may  be, the  purchase  price  relating  to  the  transfer of  property  in  goods (whether as  goods  or in some  other  form)  involved in the  execution of a works  contract.