Rule 55 — GAR
Original Rule Text
55. The: technical estimates of a work take cognizance of all anticipated receipts from sale proceeds of materials, plant, etc. received from the old: structure, while the receipts under "stock and suspense" are by their very nature nseparable from the expenditure recorded under: the main head. The recoveries falling under these two categories: shall notwithstanding anything to the contrary provided by or under: the rules in this Chapter, be treated as reduction of gross expenditure.
Classification of receipts and recoveries on Capital Accounts.
What This Means
Rule 55 establishes a specific classification rule for two categories of recoveries that arise in the context of public works and stores accounting. The first category covers receipts from the sale of materials, plant, and equipment obtained from old structures during execution of a work — these are anticipated in the technical estimate (the approved cost estimate) of the work and are therefore inseparable from the work's financial structure. The second category covers transactions under 'stock and suspense' — accounting heads used during work execution to track materials procured for a work — where recoveries are by their nature inseparable from the main expenditure.
For both categories, the rule overrides whatever the rest of Chapter 5 might otherwise say. The recoveries must be treated as reductions of gross expenditure, not as receipts. This reflects the fact that these recoveries are not truly income — they are adjustments that reduce the net cost of executing the work. A technical estimate anticipates that old materials from demolition will be salvaged and sold; the net cost of the new work is only meaningful after deducting those sale proceeds.
The phrase 'notwithstanding anything to the contrary provided by or under the rules in this Chapter' signals that this is a mandatory override, not an option.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Applies to two specific types of recoveries in public works: (1) sale proceeds of materials/plant from old structures, and (2) recoveries under stock and suspense accounts.
- 2These recoveries must be treated as reductions of gross expenditure — mandatory override of the general rules in Chapter 5.
- 3The rationale is that technical estimates for works anticipate these receipts — they are integral to the work's financial plan, not standalone income.
- 4Stock and suspense recoveries are 'inseparable from the expenditure' by their nature in works accounting.
- 5'Notwithstanding' language makes this an absolute rule — it applies even where Chapter 5 would otherwise require classification as receipts.
- 6This rule is particularly relevant to PWD accounts officers, engineers-in-charge, and Central Public Works Department (CPWD) accounting.
Practical Example
The CPWD is constructing a new government office building on a site where an old, dilapidated structure stands. The technical estimate for the new building (total cost: Rs. 4.5 crores) already accounts for expected receipts of Rs. 18 lakhs from the sale of usable old bricks, steel, and timber recovered from demolition. When the demolition is carried out and the old materials are sold to a contractor for Rs. 20 lakhs (slightly above the estimated Rs. 18 lakhs), this Rs. 20 lakh is not credited to a government receipt head. Instead, under Rule 55, it is treated as a reduction of gross expenditure under the capital head for the new building. The net expenditure on the building is thus reduced from Rs. 4.5 crores to Rs. 4.3 crores in the accounts. This is the correct treatment — the sale proceeds reduce the net cost of the new construction.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
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This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.