DCIT Vs Anushka Estates (ITAT Bangalore)
Landowner under JDA Can Follow Project Completion Method; Revenue Can’t Force % Completion – ITAT Bangalore
The Bangalore Bench of the ITAT, in DCIT vs. M/s. Anushka Estates & DCIT vs. M/s. Anushka Realty Inc. (ITA Nos. 759–761 & 779–782/Bang/2025; AYs 2016-17, 2018-19 & 2019-20; order dated 19-12-2025), dismissed all seven appeals filed by the Revenue and upheld deletion of additions made by applying the percentage completion method on landowners under Joint Development Agreements (JDAs).
The Tribunal held that the assessees were landowners, not developers or contractors, and had consistently followed the project completion method. Merely because the developer adopted percentage completion, the AO could not compel the landowner to do the same. There was no transfer of ownership or significant risks & rewards merely on execution of JDA, power of attorney, or agreement to sell; ownership and tax incidence arose only upon completion of project and registration of sale deeds. Advances received were held to be liabilities till such transfer.
ITAT further noted that AS-7, ICDS-III and section 43CB were inapplicable to landowners, and even AS-9 permitted revenue recognition only when conditions of transfer were satisfied. Since the same income was offered and accepted in subsequent years under project completion method, taxing it earlier would result in impermissible double taxation. Accordingly, the orders of CIT(A) deleting additions were affirmed and all Revenue appeals were dismissed.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
