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Sale or work contract

25 April 2021

Sale of a machinery and it's installation at buyers place would be simply sale activity i.e. trading or work contract? Many times installation service is provided by vedors as bundle but not necessarily charged for installation. How it is to be treated under both circumstances?

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6 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24588 Points)
Replied 25 April 2021

It is a trading activity. Installation is a part of buying activity, charges are being included in the price of the machinery. It should be treated as part of sale price.

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Mohan Kale (390 Points)
Replied 25 April 2021

What is installation charges are mentioned separately in the invoice?

CA ABHAY GUPTA (Practice) (3235 Points)
Replied 25 April 2021

It is a trading activity, it is immaterial whether the installation charges are shown separately or not. If only installation services is provided it will cover under provision of service.

CA. Sourav Sarkar (Chartered Accountant ) (24588 Points)
Replied 25 April 2021

Installation charges should be a part of sales value

APURBA CHATTERJEE (QUALIFIED CHARTERED ACCOUNTANT) (608 Points)
Replied 26 April 2021

Kindly note that sale of machinery is a trading activity.

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Dev Yadav (student) (116 Points)
Replied 26 April 2021

Principal activities is sale of machinery and installation activity is second one and price of machinery is inclusive of installation charges even installation charges shown seperately.