Project Completion Method Allowed In JDAs | ITAT

Case Details: Deputy Commisioner of Income-tax vs. Anushka Estates [2026] 182 taxmann.com 446 (Bangalore - Trib.)

Judiciary and Counsel Details

• Prashant Maharishi, Vice President
• Keshav Dubey, Judicial Member
• Shivanand Kalakeri, DR for the Appellant.
• Nagin Kincha & Smt. Suman Lunkar, ARs for the Respondent.

Facts of the Case

The assessee, a real estate company, was engaged in real estate activity. During the survey proceedings, it was found that the assessee had entered into a Joint Development Agreement (JDA) with the developer. In respect of these joint development projects, the assessee adopted the project-completion method for recognising revenue/income.

Considering that the developer adopted the percentage completion method of accounting, the Assessing Officer (AO) contended that the assessee should also recognise the revenue accordingly. AO added to the assessee’s income under the percentage-of-completion method. The CIT(A) deleted the additions made by AO, and the matter reached the Bangalore Tribunal.

Tribunal Held

The Tribunal held that the assessee was only a landowner and not a developer or contractor. The assessee had granted the developer development rights to develop the property owned by the assessee. The developer was responsible for the construction of premium residential apartment buildings. The assessee, being the landowner, was the sole legal and beneficial owner of the scheduled property.

The assessee was recognising the revenue based on the ultimate registration of the sale deed. Since no part of the property had been registered under a duly registered sale deed, the amount received by the assessee was shown as a liability in the balance sheet. The assessee remained the owner of the land throughout the development of the property, and there was no transfer of ownership to the developer. At the highest, possession alone was given under the agreement and that too for a specific purpose.

The revenue cannot be thrust upon the assessee to adopt the percentage completion method of accounting merely because the developer was following it. The percentage completion method, as one of the recognised methods under the construction contract, is not applicable to the assessee firm, which is a landowner.

Since the assessee adopted the project completion method for revenue recognition and has consistently followed it over the years, the accounting method is also not subject to any change by the revenue.