Project completion method governs taxation of flat-buyer advances, which were not income until completion of the development project.

Advances received from flat buyers under a development agreement did not constitute taxable income in the year of receipt where the land remained with the owners until completion, the assessee consistently followed the completed contract method, and the receipts were only advances against future sale proceeds. As the project was completed later, occupation certificates were obtained in the completion years, and the same receipts were offered to tax in those years, taxing them earlier would have resulted in premature taxation of the same income. The Tribunal held that the income was correctly assessable only on project completion and the Revenue's challenge failed.

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Issues: Whether advances received from flat buyers under a development agreement were taxable as income in the years of receipt, or only in the year of project completion under the project completion method.

Analysis: The land was retained by the landowners until completion of the buildings and conveyance to the buyers' society, and the development arrangement did not transfer the land to the developer during the relevant years. The assessee had consistently followed the completed contract method, and the receipts in the earlier years were only advances against its share of sale proceeds. The project was completed later, occupation certificates were received in the completion years, and the same receipts were offered to tax in those years. On these facts, the receipts did not attain the character of taxable income merely on receipt, and the earlier-year additions would have resulted in premature taxation of the same income.

Conclusion: The advances were not taxable in the years of receipt and were correctly assessed only in the year of project completion; the Revenue's challenge failed.

Ratio Decidendi: Where land remains with the owner and the development agreement shows that income from the project is to be recognized only on completion, advances received against future sale consideration do not constitute taxable income in the year of receipt.

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