Joint development agreement receipts treated as advances, not accrued business income, where income arose only on project completion.

Advances received under a joint development agreement were treated as mere receipts and not accrued business income in the years of receipt, because the landowner's role was limited to permitting entry and executing sale deeds at the project stage. The Tribunal noted that the agreement reserved ownership characteristics, the licence to enter was not possession in part performance, and the developer alone undertook construction, marketing and sale. It also held that the Assessing Officer could not force the landowner to adopt the developer's accounting method, especially where the completed contract method had been consistently followed and accepted earlier. The additions were deleted, as taxing the same income in receipt years would create double taxation.

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Issues: Whether advances received by the landowner under a joint development agreement were taxable in the years of receipt as business income on the percentage completion method, or only on execution and registration of sale deeds on the project completion method.

Analysis: The land was reflected as a fixed asset in the books for the relevant years, and the development agreement showed that the developer undertook the construction, marketing and sale of the project. The owner's role was confined to permitting entry and executing conveyances at the appropriate stage. The agreement itself stated that the licence to enter was not to be construed as possession in part performance. On these facts, the receipts credited to the owner were only advances and did not amount to accrual of income in the years under appeal. The Tribunal also held that the Assessing Officer could not compel the owner, a separate assessee from the developer, to follow the developer's accounting method, especially when the completed contract method had been consistently followed and accepted in earlier years. The reliance on admissions in statements was held insufficient by itself, and the attempt to tax the same income in the years of receipt would result in impermissible double taxation.

Conclusion: The advances were not taxable as business income in the years under appeal, and the additions made by the Assessing Officer were deleted; the Revenue's appeals failed.

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