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TMI Blog2019 (9) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... has held that in absence of the applicability of the principle of mutuality the surplus cannot be held to be exempt on the principles of mutuality. It was further stated in the same paragraph that no other arguments were advanced to justify the applicability of the principle of mutuality. Consequently, the appeal of the assessee was dismissed. Against the order of the coordinate bench, Assessee preferred appeal before the honourable Delhi High Court. Hon. High Court was pleased to notice the issue in the appeal as per paragraph number 2 holding that the only issue, which arose in this case, is with respect to the taxability Vis a Vis Mutuality of Rs. 4444002/- being excess amount of income or expenditure. The honourable High Court dismissed the appeal of the assessee holding that the principle of mutuality would not be applicable to the instant case. Accordingly the order was passed by the honourable High Court on 1/4/2009 holding as under :- "2. The only issue which arose in this case is with respect to the taxability of Rs. 44,44,002/- being excess amount of income over expenditure. The said surplus had arisen on account of advertisement contributions received from the holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e mutual benefit of the franchisees. The entire activity of the assesseecompany was to be carried out on no-profit basis and that the assessee-company was obliged not to repatriate any dividends. The broad purpose of the agreement is best encapsulated in the following clauses:- "2.2 TRIM will establish and operate Brand Funds in respect of each brand for the purpose of allocating and using the advertising contribution received from franchisee and other franchisee of Tricon operating Restaurants under the Brands. TRIM will allocate the advertising contribution received from the franchisees including franchisee for each restaurant to the respective Brand Funds established for that brand. It is agreed between the parties that the advertising contribution paid into a brand fund will be used for the AMP activities relating to that brand. 3.1 As and from the Effective Date, franchisee will pay the advertising contribution of 5% of Revenue for a particular month into the bank account of the brand fund established by TRIM by the 10th day of the following month. Details of the bank account of each brand fund set up by TRIM will be notified to franchisee by TRIM from time to time. Notw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at accounting period. For the avoidance of doubt, it is agreed between the parties that Tricon and/or TRIM shall not be obliged to fund the deficit. 8.5 It is clearly understood and agreed between the parties that the only objective of TRIM is to coordinate the marketing activities of the brands including the mutual benefit of the franchisees including the franchisee. It is envisaged that no profits will be earned and no dividends will be declared by TRIM." 3.3 It is in this background that on 31.10.2001 the assessee-company filed its return for assessment year 2001-02. On 27.08.2002, the assessee's return was processed under Section 143(1) of the Act. On 24.10.2002, the assessee's case was picked up for scrutiny and a notice under Section 143(2) of the Act was issued to the assessee-company. During the course of scrutiny, queries were raised with the representatives of the assessee-company; whereupon it was revealed that the assessee-company had an excess income over expenditure amounting to Rs. 44,44,002/-. However, the gross total income had been declared as 'nil'. The income and expenditure account as recorded in the order of the Assessing Officer read as follows:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isee as was being done by it prior to setting up of assessee-company. This findings shows that assesseecompany has been used as a tool to evade tax on excess of income over expenditure incurred in during the previous year. A chart giving complete details of contributions receivable by assessee-company and amounts actually received by assessee-company and YRIPL is being enclosed as Annexure 'A'. This annexure shows that most of the contribution has been received by YRIPL that is against terms of SIA approval and even the clauses of Tripartite operating agreement. VI.5 Single Ledger Account- assessee-company and YRIPL - considered as one entity- Information under Section 133(6) was called from all the franchisees. The information received from such franchisees is analyzed in the ensuing paras below. In their books of account, the franchisees have one ledger account for royalties marketing advertising payable to YRIPL/assessee-company. For them it is single entity. They have not maintained any separate account of assessee-company. A few instances are discussed below....... ....The assessee-company was also informed about nonsubmission of details by Pepsi Foods Ltd. vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that is, the contributors. It could not be said that the contributors activity was immune from the taint of 'commerciality' and that unlike a club the assessee-company was not set up for social intercourse nor was a set up for cultural activity where the idea of profit or trade does not exist. What was essential was that there should not be any dealing with the outside body, which results in benefit, which promotes some commercial/business venture. He further held that though the form taken up to conduct its activity resembles a mutual concern, it could not however be denied that the contributions were made undoubtedly for business considerations. The CIT(A) being of the view that the underlying purpose was solely for commercial consideration and excess of income over expenditure should be brought to tax. 7. Being aggrieved, the assessee-company preferred an appeal to the Tribunal. The Tribunal by the impugned judgment dismissed the appeal of the assessee-company after noting the facts of the case as well as the principle of mutuality invoked by the assessee-company to sustain its stand that the said excess of income over expenditure was not taxable. The Tribunal noted that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantial question of law arises for our consideration. Resultantly, the appeal is dismissed." [Underline supplied by us ] 3. Subsequently before Honourable Supreme Court assessee preferred petitions for special leave to appeal in (civil) numbers 20571/2009 arising out of the judgment dated 1/4/2009 in ITA number 1433/2008 of the honourable Delhi High Court. As per order dated 26/3/2010, the honourable Supreme Court granted the leave to the assessee. 4. Meanwhile, assessee preferred a Miscellaneous Application vide M A No. 295/Del/2008 before the coordinate bench stating that ground number 1 (b) raised in the appeal memo, though noted by the tribunal in its order in para number 3, has remained to be disposed of. The coordinate bench vide order dated 31/03/2010 vide para number 8 , has not been decided, therefore there is a 'mistake apparent from record'. The said ground was as under:- (b) in failing to consider and appreciate that the amount received by the Appellant from the franchisees towards advertising contributions are diverted at source by overriding title for being spent on advertisement, and 5. Relying upon the decision of the honourable Gujarat High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merging out of the following judgments by the appellant: Siddheshwar Sahakari Sakhar Karkhana Ltd vs. CIT (SC) (270 ITR 1) * CIT vs. Netar Krishna Sahgals Pr. Ltd (Delhi) (141 ITR 681) * Mehboob Productions Pvt. Ltd vs. CIT (Bombay) (106 ITR 758) * CIT vs Late Rajesh Pilot (Delhi) (219 CTR 403) b. The amounts received by the appellant from YRIPL, its franchisee's and other concerns, is for the predefined purpose of incurring them on AMP activities. In view of the obligation that has been imposed under the facts and circumstances of the present case, the appellant is never in receipt of any 'income' since the amounts that are received as AMP contributions are diverted at source by an overriding title in view of this enforced obligation. c. Thus the surplus that remains, if any, at the end of the accounting period is not exigible to tax. This is even more so in view of the fact that the surplus that remains, is either to be expended in the subsequent period or to be refunded to the contributories in the same proportion as it is received. The AMP contributions never vests in the hands of the appellant as its income as it does not have any 'right' or 'discret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the agreed purposes (i.e. for marketing activities) and it was not an unfettered receipt in the hands of the assessee. The Hon'ble Tribunal further held that it was a kind of trust money, received in fiduciary capacity by the assessee and hence it cannot be viewed as "income" of the assessee. Also, it was held that the contribution having been made by the participating hotels/ franchisee's mandatorily does not affect the determination of the character of receipts. f. Your honors would appreciate that the facts and circumstances of the appellant's case are identical to that of the issue involved in the case of Bass International Holdings N.V. (supra). Therefore, keeping in mind the principles emerging out of the above mentioned judgments of the Hon'ble Apex Court and Mumbai Tribunal, as the amounts received by the appellant are within an overriding obligation of incurring the same for AMP activities, the amounts received cannot be categorized as income, much less the same being chargeable to tax. g. The appellant further places reliance on the principles emerging out of the following landmark judgments in support of its contention that the AMP contributions are diverted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue that any money is diverted by the assessee sugar factory for any other purpose other than approved in the AGM of the members. Merely because the amount collected is not kept separately in the bank account, the character of the amount will not change as held in the case of Bijli Cotton Mills (P.) Ltd. (supra). As submitted before us the assessee is required to submit the Auditor's Report to the Director of Sugar, Govt, of Maharashtra each year showing the opening balance of the ADF, amount collected during the year and utilized during the year (Page No. 29 of the Compilation). We, therefore, hold that the collection made by the assessee towards the ADF by way of deduction made from the sugarcane bills payable to the members and non-members is impressed with an obligation to spend the same for the specified purposes and the persons/Members paying contribution to ADF are aware before the deduction is made that for what purpose the assessee Cooperative Factory is collecting the said fund and where the fund will be utilized. In our humble opinion, the assessee's role is like a trustee of the "Area Development Fund". We, accordingly, decide this issue in favour of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the years in which excess expenditure is there). Thus, there is no intent to earn any profit nor has any profit been earned in view of the actual functioning of the appellant and the activities carried out by it. In v Yum! Restaurants Marketing Pvt. Ltd, k. iew of the foregoing discussions and judicial precedents being relied upon by the appellant it is amply clear that the amounts received by the appellant are not in the nature of income as it is under an overriding obligation to expend the same on AMP activities. The appellant has no vested right in the amounts that it receives and is under a strict mandate either to expend the same or return the surplus if any. Therefore it has no rights over the funds and is a mere conduit to expend the amounts received in a collective manner for and on behalf of all the contributories." 8. The learned authorised representative has further referred to the additional evidences filed for assessment year 2002 - 03 and 2003 - 04 as per application dated 7/4/2010 being the advertisement material of the Pepsi. He further referred to the letter dated 12/file/2015 and submitted that it is common for the both the years to show that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal of the assessee vide order dated 31.03.2008. It was held that principle of mutuality is not applicable in the case of the assesse and the surplus of income over expenditure cannot be held to be exempt income. 6. Against the order of the Hon'ble ITAT, the assesse preferred an appeal before the Hon'ble Delhi High Court. The Hon'ble Delhi High Court considered the facts of the case in detail and upheld the decision of Hon'ble ITAT vide its order dated 1.04.2009 holding that the assesse doesn't fulfill the conditions and requirements of a mutual concern. It was held that the assessee company had not only received the contributions from various franchises but also from "P" Ltd and YRIPL who were neither franchisees nor beneficiaries and therefore essential requirements of a mutual concern were missing and that Tribunal had taken a correct view. Subsequently the SLP filed in Hon'ble Supreme court was filed and admitted on 26.04.2011 but no order has been apparently passed on that. 7. The assesse filed M.A. on 25.06.2008 which was revised and filed on 10.07.2009 , which was after 4 months of the order passed by Hon'ble High Court for rectification of the order dated 31.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase. 10. It may be appreciated that matter in issue in this case is whether surplus of income over expenditure in respect of advertising contributions / receipt is taxable or not. The assessee raised the following ground of appeal before the ITAT 1. The Learned CIT(A) has erred both on facts and in law a. in not accepting that the appellant Is a "mutual concern" and is solely operating for the benefit of a group of persons who contribute funds which are to be spent on advertisement and publicity for their benefit, b. in failing to consider and appreciate that the amount received by the appellant from the franchisees towards advertising contributions are diverted at source by overriding title for being spent for advertisement. c. in consequently upholding that Rs. 44,44,002/- being the unspent amount is taxable income in the hand of the appellant for the A. Y. 2001-2. (emphasis added) From the above, it can be noted that the assessee has taken the ground that the CIT(A) has wrongly upheld the income of Rs. 44,44,002/- by - 1, not accepting that assessee is a mutual concern and 2. not considering advertising contributions are diverted at source by overriding titl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson as follows: "The plea of res judicata applies, except in special case (sic), not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation and which the parties, exercising reasonable diligence, might have brought forward at the time." In Greenhalgh v. Mallard (hereinafter "Greenhalgh"), Somervell L.J. observed thus: "I think that on the authorities to which I will refer it would be accurate to say that res judicata for this purpose is not confined to the issues which the Court is actually asked to decide, but that it covers issues or facts which are so clearly part of the subject matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the Court to allow a new proceeding to be started in respect of them." The judgment in Greenhalgh (supra) was approvingly referred to by this Court in State of U. P. v. Nawab Hussain. Combining all these principles, a Constitution Bench of this Court in Direct Recruit, Class II Engineering Officers' Association v. State of Maharashtra expounded on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter which the parties might and ought to have litigated and have had decided as incidental to or essentially connected with subject matter of the litigation and every matter coming into the legitimate purview of the original action both in respect of the matters of claim and defence'' 16. In the case of Workmen v Board of Trustees , Cochin Port Trust (1978) 3 SCC 119, the Hon'ble Supreme Court has held as under "It is well known that the doctrine of res judicata is codified in section 11 of the Code of Civil Procedure but it is not exhaustive. Section 11 generally comes into play in relation to civil suits. But apart from the codified law the doctrine of res judicata or the principle of res judicata has been applied since long in various other kinds of proceedings and situations by Courts in England, India and other countries. The rule of constructive res judicata is engrafted in Explanation IV of section 1 1 of the Code of Civil Procedure and in many other situations also principles not only of direct res judicata but of constructive res judicata are also applied. If by any judgment or order, any matter in issue has been directly and explicitly decided the decision opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07 and Vijayan v. Kamalakshi, [1994] 4 SCC 53 : AIR (1994) SC 2145. In the case on hand, it is clear that in the earlier suit, the Court had recorded a clear finding that defendant- Bhagwandas was neither the owner of the property nor he could show any right as to how he was occupying such property except as a tenant of Hiralal. If Bhagwandas was claiming to be in lawful possession in any capacity other than a tenant, he ought' to have put forward such claim as a ground of defense in those proceedings. He ought to have put forward such claim under Explanation IV to Section 11 of the Code but he had failed to do so. The doctrine of constructive res judicata engrafted in Explanation IV to Section 11 of the Code thus applies to the facts of the case and the defendant in the present suit cannot take a contention which ought to have been taken by him in the previous suit and was not taken by him. Explanation IV to Section 11 of the Code is clearly attracted and defendant-Bhagwandas can be prevented from taking such contention in the present proceedings. " 18. In the case of Electrocast Sales India Ltd. V DCIT , [ 2018] 170 ITD 507 (Kolkata - Trib.) held as under "4.6 The Id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he was dismissed from service. He laid a suit against the order of dismissal. The suit came to be decreed and he was consequently reinstated. Since the arrears were not paid, he filed a writ petition in the High Court. The High Court by order dated 16-8-1982 directed the appellant to pay all the arrears. That order became final. Consequently, arrears came be paid. Then the respondent filed an OA claiming interest at 18 per cent p. a. The Administrative Tribunal in the impugned order directed the payment of interest. Thus, this appeal by special leave. 4. The Tribunal has committed a gross error of law in directing the payment. The claim is barred by constructive res judicata under section 11, Explanation IV of the Code of Civil Procedure, 1908, which envisages that any matter which might and ought to have been made ground of defense or attack in a former suit, shall be deemed to have been a matter directly and substantially in issue in a subsequent suit. Hence, when the claim was made on earlier occasion, he should have or might have sought and secured decree for interest He did not set and, therefore, it operates as res judicata. Even otherwise, when he filed a suit and specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in special cases. The court should also be satisfied that there is no chance of the suit succeeding. In the case of Greenhalgh v. Mallard [19147 (2) AER 255] the court had to consider different proceedings on the same cause of action for conspiracy, but supported by different averments. The Court, held that if the plaintiff has chosen to put his case in one way, he cannot thereafter bring the same transaction before the court, put his case in another way and say that he is relying on a new cause of action. In such circumstances, he can be met with the plea of res judicata or the statement or plaint may be struck out on the ground that the action is frivolous and vexation and an abuse of the process of court. In Mcllkenny v. Chief Constable of West Midlands Police Force and another [1980 (2) AER 227], the Court of Appeal in England struck out the pleading on the ground that the action was an abuse of the process of the court since it raised an issue identical to that which had been finally determined at the plaintiffs' earlier criminal trial. The court said even when it is not possible to strike out the plaint on the ground of issue estoppels, the action can be struck out as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the arguments/grounds taken by the assessee are related, the ITAT did not give its specific findings in respect of diversion of income by overriding title. The assessee took up the matter before the Hon'ble Delhi High Court. The Hon'ble Delhi High Court considered the facts of the case in detail and passed the order holding that the judgment of the ITAT deserves to be sustained. 23. Further, after 4 months of the order passed by Hon'ble High Court, the assesse filed a revised miscellaneous application on 10.07.2009 for rectification of the order dated 31.01.2008 passed by the. On perusal of the rectification order dated 31.03.2010 , it may be noted that in Para 4 of the order it is mentioned that the Ld Counsel of the assessee submitted that MA was filed before the Tribunal prior to the appeal filed before the High Court. In this connection, attention is further drawn to the following portion of para 4 of the aforesaid rectification order dated 31.03.2010 that - "Even in appeal filed before the High Court it was specifically contended that the issue raised in ground no. 1(b) has not been disposed off in respect of which a miscellaneous application is pending. For this p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late or revlsional authority prevailed over the lower court or authority's order. " 26. Further, reference is made to following portion of the order which is extracted as under:- 24. This court is of the opinion that in the present case, the issue sought to be urged by the assessee in the first ITAT order was in its cross objection, concerning the legality of reassessment. Undoubtedly, the validity of a reassessment notice can be a matter of substance. The merits of the additions made after considering the assessee's contentions were deleted by the CIT (A). He however upheld the reassessment proceeding. The assessee had two courses: either appeal or cross object against that part of the order, to the ITAT. It chose the latter, when the revenue appealed to the tribunal. The ITAT rejected the revenue's appeal and also dismissed the assessee's cross objections as infructuous. At that stage, the assessee could have cross objected before this court, or filed independent appropriate proceedings to protect its interest. It however was sanguine about its case on the merits; unfortunately, it did not choose to appeal or question the dismissal of its cross objections. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer..." 28. Furthermore, this court is of the opinion that the conduct of the assessee was speculative, to put it mildly. As observed earlier, it is not an uninformed litigant; it calculatedly chose not to question the rejection of its cross objection (on grounds of its having been rendered infructuous). Having waited more than a year after the decision of this court (which was rendered on 21-12- 2012), it approached the ITAT in 2014. It offered no explanation why it did not seek the rectification earlier, during the pendency of the revenue's appeal- in that event, if the ITAT had rejected its application this court would have given suitable directions. Instead, waiting for the time till the two members who decided the first ITAT orders were not available and choosing to prefer the rectification application at a convenient time, the assessee no doubt technically was compliant, but stood exposed to the odium of forum shopping. 29. In the circumstances of this case, the court holds that the rectification application filed by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g with the doctrine of merger. It would be advisable to trace and set out the judicial opinion of this Court as it has progressed through the times. 2. In CIT v. Amritlal Bhogilal & Co. AIR 1958 SC 868 this Court held : "10. There can be no doubt that, if an appeal is provided against an order passed by a Tribunal, the decision of the appellate authority is the operative decision in law. If the appellate authority modifies or reverses the decision of the Tribunal, it is obvious that it is the appellate decision that is effective and can be enforced. In law the position would be just the same even if the appellate decision merely confirms the decision of the Tribunal. As a result of the confirmation or affirmance of the decision of the Tribunal by the appellate authority, the original decision merges in the appellate decision and it is the appellate decision alone which subsists and is operative and capable of enforcement;...." (p. 871) However, in the facts and circumstances of the case, this Court refused to apply the doctrine of merger. There, an order of registration of a firm was made by the ITO. The firm was then assessed as a registered firm. The order of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e judgment of the lower court, thus, constituting the judgment of the High Court the only final judgment to be executed in accordance with law by the Courts below." 4. In S. S. Rathore i/. State of Madhya Pradesh AIR1990 SC 10 a larger Bench of this Court (Seven-Judges) having reviewed the available decisions of the Supreme Court on the doctrine of merger, held that the distinction made between the Courts and the Tribunals as regards the applicability of the doctrine of merger is without any legal justification; where a statutory remedy was provided against an adverse order in a service dispute and that remedy was availed, the limitation for filing a suit challenging the adverse order would commence not from the date of the original adverse order but on the date when the order of the higher authority disposing of the statutory remedy was passed. Support was taken from the doctrine of merger by referring to Amritlal Bhogilai & Co's case (supra)and several other decisions of this Court. 5. The logic underlying the doctrine of merger is that there cannot be more than one decree or operative order governing the same subject matter at a given point of time. When a decree or or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge at the cost of rights. 116. In Manganese Ore (India) Ltd. v. The Regional Assistant Commissioner of Sales Tax, Jabalpur(1976) 4 SCC 124 this court held that the doctrine of stare decisis is a very valuable principle of precedent which cannot be departed from unless there are extraordinary or special reasons to do so. 132. This court in a recent judgment in M. Nagabhushana v. State of Karnataka and others (2011) 3 SCC 408 observed that principle of finality is passed on high principle of public policy. The court in para 13 of the said judgment observed as under: That principle of finality of litigation is based on high principle of public policy. In the absence of such a principle, great oppression might result under the color and pretence of law inasmuch as there will be no end of litigation and a rich and malicious litigant will succeed in infinitely vexing his opponent by repetitive suits and actions. This may compel the weaker party to relinquish his right. The doctrine of res judicata has been evolved to prevent such anarchy. That is why it is perceived that the plea of res judicata is not a technical doctrine but a fundamental principle, which sustains the rule of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the income is required to be applied to discharge an obligation after such income reaches the assessee, the same consequence, in law, does not follow. In the instant case, at the most assesse has applied its income received from its clients to discharge its expenses towards advertisement, marketing and publicity expenses. 34. Further, in the case of Pr. CIT v Chamundi Winery & Distilley [2018] 97 taxmann.com 568 (Karnataka), it has been held as under ■ Admittedly, the assessee in the instant case was the Excise Licensee under the provisions of the Karnataka Excise Act, 1965 and Diageo India had no Excise License in its name from the State during the relevant assessment period. The business of m.s matter is squarely covered by the doctrine of merger and doctrine of finality. Therefore, this appeal deserves to be dismissed. Diversion of Income by overriding title 35. Without prejudice to the abovementioned submission on the ground of applicability of constructive res judicata and doctrine of merger in this matter, the claim of the assesse in respect of diversion of income by overriding title is correct on facts and law. Law is well settled that the doctrine of divers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any stretch of imagination that such a business was being done exclusively for and on behalf of the third party, viz. Diageo India, who was not at all subject to any control under the Excise Act. The income or business profits taxable under the Income- tax Act, 1961 naturally arose out of the said business activity of manufacture and sale of liquor only. Merely because the Diageo Pic. is a Brand owner and a big liquor business entity of United Kingdom, whose Indian Subsidiary, Diageo India had a private arrangement or Agreement like the one under the Agreement dated 30-10- 2007 with the respondent assessee and many other such Agreements with others and it provided not only right of user of brands, trademarks and labels, but also provided some raw materials and concentrates and the working capital etc., and the bank accounts were to be operated by the respondent assessees were also closely monitored, it does not mean that the present assessee was either only an agent or a benami of Diageo India. For all practical and legal purposes, de facto and de jure, the respondent assessee was the Excise Licencee engaged in the business of manufacture and sale of liquor during the relevant per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same in the overall analysis of the facts and legal position applicable to the facts of the present case. 75. What we further feel Is that the "diversion of income by transfer of overriding title at source" should normally have the support of the statutory requirements or some decretal binding character of Courts of law and even though the private contractual obligations can also bring about such "diversion of income at source" but in this last sphere of private contractual obligations, the Courts and the Income Tax Authorities have to examine such aspects carefully in comparison to the above two other categories of statutory requirements and the Court decrees and then examine the real purport and object of such private arrangements and Contracts. 76. Besides the issues of the legality of the Agreement, the real intention of the parties should be ascertained as to see whether such arrangements and contracts have been entered into to deflect and divert the applicability of Income-Tax laws on the Assessee who has really earned the "real income", profits and gains under such Contract or whether such diversion is only an arrangement to suit the purposes of tax avoidance in su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to diversion of income by overriding title also, assesse has no case. 42. In other assessment years, which are under appeal before the Hon'ble ITAT, the same issue is involved. The facts are similar in other assessment years as well. The essential requirements of a mutual concern are missing. The fact remains that Pepsi Food Ltd. was a contributor to the fund did not benefit from the APM activities. Contributors of the fund and beneficiaries are not the same and therefore, the income of the assessee cannot be excluded from taxation on the ground of mutuality. The assessee does not meet the conditions as laid down in the decision of Bankipur Club Ltd, Chemsford Club Ltd and Bangalore Club Ltd. as regards mutual concerns. Further, the observation of the Hon'ble Delhi High Court in the case of the assessee for A.Y. 2001-02 to the effect that the principle of mutuality is applicable to those entities whose activities are not tinged with commercial purpose continues to be applicable since the assessee continues to engage in the business activity of advertising, marketing and publicity. As regards plea of diversion of income by overriding title, the above discussion in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the name of the Pepsi does not make it a contributor and beneficiary both. He therefore submitted that this additional evidence does not make any difference on the issue of principles of mutuality. 47. The learned DR also referred to the balance sheet of the assessee company and stated that when the assessee itself has accounted for the advertisement contribution from franchisee and holding company amounting to INR 7 8429361/- in its profit and loss account therefore it is apparent that this income is available for the assessee to be spent according to the objects of the company. He submitted that this fact itself shows that there is no diversion by overriding title over this income. He further stated that there is in excess of income of Rs. 4444002/- brought forward from the previous year and during the year there is in excess of income over expenditure of INR 3 408129/- thus the above excess of expenditure is available to the assessee of income and therefore there is no diversion by overriding title of the income of the assessee. He further stated that merely because the unspent contribution of INR 7 852131/- which is accumulated over the assessee profit has been shown as cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble High Court he submitted that the issue of merger is already adjudicated in the miscellaneous application in para number 8 of the order. He submitted that the coordinate bench has considered the decision of the honourable Gujarat High Court as well as the decision of the special bench of the tribunal to recall the order of the coordinate bench to decide on the ground which is not at all been decided in the original order. d. With respect to the decision of the honourable Delhi High Court in case of N R Portfolio private limited ( Supra), he submitted that the facts of that case are quite different from the facts before the coordinate bench e. With respect to the argument of the learned about the accounting entry he submitted that the contribution to be spent on future promotion has been shown as current liabilities in schedule 5 of the annual accounts. He stated that INR 7 852131/- is shown as a current liabilities which is an obligation on the assessee to be spent on the advertisement expenditure. He submitted that the same has not been credited to the general reserve account of the assessee. Thus, though the sum is credited to the profit and loss account the excess is ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of industry for carrying out advertisement and promotion activities for Kentucky fried chicken and Pizza Hut restaurants in India. As per the approval the company is a non-profit-making enterprise. The company has entered into an operating agreement with its holding company and its franchises where under the franchisees will pay a certain percentage of the revenue as advertisement contribution to the company. Further the holding company may also at its sole discretion paid to the company such amount as it may deem appropriate to support the activities of the company. According to the operating agreement the preamble show that under the terms of the franchisee agreement, they have agreed to pay certain advertisement contribution to the holding company ought to local and original and/or national advertising arrangement under setup by the holding company. The assessee company is established as a wholly owned step-down subsidiary of the holding company to manage for retail restaurant business, the advertisement, media and promotion at regional level and national level of contract if right kitchen and Pizza Hut and other brands currently owned or acquired in future by the holding compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcess of income over expenditure. Further there was an outstanding carried forward of excess of expenditure from the previous year amounting to INR 1 24248/- which resulted into the net surplus of Rs. 4444002/-. The above sum has been shown by the assessee under the head current liabilities as excess of income over expenditure of Rs. 4444002/-. It is also necessary to understand how these funds have been invested by the assessee. The amount of INR 6 389831/- is outstanding in sundry debtors account, INR 2 404127/- is advances recoverable in cash or kind of INR 2 404127/- the balance sum is locked up in the cash in bank balances. Further according to clause 4 of the above operating agreement the holding company may at the request of the assessee but subject to holding companies sole and absolute discretion paid to assessee any such amount as it may deem appropriate to support the AMP activities during any accounting period. Further it was clarified in the same clause that the holding company shall have no occasion to pay any such amount if it chooses not to do so. However the contribution of the franchisee is covered in clause 3 of the agreement wherein there is a mandatory requirem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement this of operating agreement with the franchisee shall be coterminous with the franchisee agreement and shall terminate automatically with immediate effect on the determination of the franchisee agreement. However on determination there is no provision of paying the balance outstanding amount of the franchisee from the assessee, which remains unspent. However as per clause number 10.3 in the event of termination or expiry of the agreement without determination of the franchisee agreements, the advertising contribution payable by franchisee will be paid by the franchisee to the holding company as per the provisions of the franchisee agreement from the effective date of termination of operating agreement. In view of above facts, the claim of the assessee is that the income of the assessee is diverted by overriding title and hence cannot be taxed in the hands of the company. 13. The above issue is challenged by the assessee as per ground number 1 (b) which has not been decided by the coordinate bench in its original order in ITA number 3235/Del/2005 for assessment year 2001 - 02 dated 31/01/2008. Therefore the assessee preferred a Miscellaneous Application Number 295/Del/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case at page number 13 in para number 2, the learned CIT appeal has dealt with this issue but adjudicated stating that as it is related to the ground number 1, which was related to the mutuality, no separate adjudication is required. Therefore the assessee raised this ground before the coordinate bench. Now the issue is, wherein the honourable High Court has decided an issue with respect to the taxability of the sum, whether above issue has reached finality or not? If it has reached finality, the coordinate bench does not have any power to adjudicate on 'any issue or any aspect of the matter' considered by the honourable High Court. If for the sake of convenience, it is presumed that coordinate bench agrees with the submission of the learned authorised representative that income is diverted by overriding title, then, the decision of the honourable High Court holding that the income of the assessee is chargeable to income tax, then, the situation will arise that same amount of income which is held to be taxable as income by the honourable High court earlier and subsequently Tribunal will hold that it is not chargeable to tax as income on altogether different grounds. In such a situ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o not agitated before the honourable High Court, therefore, it is apparent that the matter has reached the finality. 17. Hence, we are precluded from dealing with any aspect about the taxability of the sum, which has been considered by the honourable High Court in para number 2 of its order. To reach at the above conclusion, we are guided by the decision of the honourable Delhi High Court in Principal Commissioner Of Income Tax Vs N R Portfolio Private Limited dated 25/02/2019 reported at (2019) 103 taxmann.com 17 (Delhi). The facts of that case and the impugned case before us are identical. 18. In view of above facts, we dismiss ground number 1 (b) of the appeal of the assessee only on the issue of principles of finality and doctrine of merger. 19. Accordingly appeal of the assessee for assessment year 2001 - 02 is dismissed. ITA No. 2896/Del/2007 Assessment Year 2002-03 20. Assessee has raised the following grounds of appeal in ITA No. 2896/Del/2007 for the Assessment Year 2002-03:- "1. The learned Commissioner of Income-tax (Appeals) has erred in confirming the order of the Assessing Officer assessing the total income of the Appellant at Rs. 3,408,129/- 2. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned authorised representative that the above additional documentary evidences are vital for deciding the appeal of the assessee. The additional evidences are as under:- a. simple copy of franchisee agreement entered into by assessee with specialty restaurants private limited as annexure 1 and b. advertising material published in various newspapers as per annexure -2 location of additional evidences also supported by an affidavit. 23. The assessee submitted that the additional material in the facts of the instant case was to the root of the case and in the direct and relevant bearing on the basic issue arising from the decision of the coordinate bench. Therefore such additional evidences play pivotal role and the same is essential for proper consideration and adjudication of the controversy involved. It is further stated that the assessment year 2001 - 02 the appellant's plea of being a mutual concern was rejected by the lower authorities on the premises that there is no concept of a mutual concern applicable to the income tax act. The lower authorities are simply applied the said decision and it is rational to the subsequent years which under consideration before the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany. Thus holding company has its interest embedded in the retiring and sales promotion activities carried out by the appellant. He further submitted that the interest of the holding company and the benefit accruing to it from the activities of the assessee is far more than that accruing to the franchisees. It was further stated that in the case of Pepsi foods Ltd under a marketing arrangement the franchisees of the holding company were exclusively selling the beverages made by Pepsi foods Ltd at the outlets and in some of the advertisements issued on behalf of the franchisees, the products of Pepsi foods Ltd were prominently displayed. With the increase in sales at the various outlets of Pizza Hut, on account of the advertisement and marketing activities of the assessee, there was a corresponding increase in the sales of Pepsi products. Thus even Pepsi food Ltd has also benefited out of the contribution made by it to the appellant. He further referred to the sum of the advertisement material published in the newspapers in support of the above contention. He further stated that the above material conclusively establishes the benefit flowing to Pepsi foods Ltd from the advertiseme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd are also the contributors as well as beneficiaries of the activities of the assessee, we do not find any reason to not to admit those additional evidences. Therefore in the interest of the justice, we admit those additional evidences. 28. Now we come to the issue whether the principles of mutuality apply to the income of contribution from franchisee is tainted with the above concept and therefore not taxable in the hands of the assessee. It is interesting to note paragraph number 8 of the order of the honourable High Court in case of the assessee for assessment year 2001 - 02 wherein the arguments of the assessee about the mutuality principles, were rejected. The honourable High Court held as under:- "8. Having heard the learned counsel Mr C.S. Aggarwal, Sr. Advocate for the assessee-company and Ms Prem Lata Bansal for the Revenue we are of the view that the judgment deserves to be sustained. The principle of mutuality as enunciated by the Courts in various cases is applicable to a situation where the income of the mutual concern is the contributions received from its contributors. The expenses incurred by the mutual concerns are incurred from such contributions and hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that principle of mutuality is applicable to those entities whose activities are not tinged with commercial purposes. Therefore according to us, the additional evidences submitted by the assessee do not make any impact on the income of the assessee. Further as per the operational agreement as discussed by us there is no obligation on the holding company to contribute for the advertisement expenditure. Even otherwise it is at the sole discretion of the holding company. Therefore, we do not find any reason to disturb the finding of the coordinate bench, which has been approved by the honourable High Court in assessee's own case for assessment year 2001 - 02. Accordingly ground number 2 of the appeal for assessment year 2002 - 03 is dismissed. 30. Now we come to ground number 3 of the appeal where the assessee has contended that receipt of INR 78429361/- which represent advertising contribution received from the franchisees and the holding company are in fact diverted at source by overriding title and therefore the surplus over the expenditure is not liable to tax. Admittedly in the present case we are duty bound to decide the above issue. The contention of the assessee is that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customary levy prevailing in certain parts of the country and it was not paid as a price for the commodity is sold to the customers. In that particular case the receipt from the inception were impressed with the obligation to spend the same only on charitable objects. The honourable Supreme Court further considered that what is the true nature or character of these receipts whether they constitute a part of the prize received by the assessee while affecting the sale of yarn or cotton and therefore trading receipts of the assessee and reach a conclusion that same was not trading receipts. In the present case in the account of the assessee the contributions were received were shown as income in the profit and loss account (income and expenditure account) and the expenditure were different for administrative and other expenditure and also the advertisement expenditure were incurred out of it. As per the significant accounting policies being part of the accounts the assessee also has a policy that advertising contributions from franchisees and the parent company is accrued as income in accordance with the terms of the agreements entered into with them. Further in the background to sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion cited by the learned authorised representative in fact goes against it. 32. The learned authorised representative also referred to the decision of the Pune bench in 148 ITD 372 wherein it is held that where a cooperative sugar factory deducted certain amount from bills payable to members and nonmembers towards supply of sugarcane on account of area development fund, in view of the fact that the said amount was impressed with an obligation to spend same for specified social purposes approved in annual general meeting, it could not be brought to tax in the assessee's hands as income. In that particular case the director of sugar, government of Maharashtra of the supervising authority on the collection and use of area development fund. Assessee also transferred the above sum a specific had of area development fund. The above fund can also be utilized after the approval of the members of the society in the annual general meeting. In the present case the assessee has credited the income of advertisement marketing promotion activities as the income of the assessee in its income and expenditure account and further the spend out of the same is also not at the discretion of the franc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conjoint reading of the franchisee agreement and the operating agreement it is apparent that the holding company of the appellant has created a specific entity for the purposes of performing the advertisement promotion and marketing activities of its franchisee by collecting the funds from the franchisee. There is no obligation on the assessee also to spend any definite amount every year on the advertisement marketing and promotion activities. Further, neither the assessee nor the holding company were in any manner applies to fund the deficit if any on account of AMP activities. Therefore, according to us, the assessee has received that income for the purposes of the business of the assessee and out of the above income it makes an advertisement of the licensee is of the holding company for increasing the overall business of the holding company and to gain the higher royalty from franchisees to the holding company. 35. Further, assessee is placed before us the copy of the memorandum and articles of Association of the appellant. The assessee company was formed on 18/06/1999. The certificate of incorporation furnished shows that Assessee Company was a company having limited liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial assistance, foreign collaboration -II section dated 5th October 1998. Such approval is placed at page number 1 - 4 of the paper book. The assessee is relying heavily on 1 of the conditions mentioned in para number 3 that the proposed new company would be a non-profit enterprise is governed by the principles of mutuality. As the issue of the mutuality has already been decided by the honourable High Court against the assessee according to us, so far as the provisions of the income tax act are concerned, the income of the assessee is not covered by the principles of mutuality. Further the application was made to setup a wholly on step-down subsidiary to manage retail restaurant business for advertising and promotion at local store level, regional level and national level. Therefore it is apparent that the above approval was granted to carry on the business. Further according to the condition number 3 the franchisees and the holding company were both to make contribution of the fixed percentage of the respective revenues to the proposed new company on regular basis. On careful reading of the operating agreement and as observed by the honourable High Court, the holding company was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at all reached the assessee or whether the same was diverted at the source itself. The fact that the assessee was legally or statutorily obliged to part with such an income by itself cannot be a criterion to decide this question. The nature of obligation is also significant factor to conclude. In the present case, to reach at the conclusion that income of the assessee is not diverted by overriding title, we have relied on the operating agreement, the franchisee agreement, the memorandum of Association, the annual accounts of the assessee as well as approval granted by the SIA. Accordingly we dismiss ground number 3 and 4 of the appeal of the assessee. 40. Ground number 5 is with respect to violation of the principles of natural justice. No arguments were advanced before us and therefore we dismiss the same. 41. Ground number 6 is with respect to charging of interest u/s 234B of the income tax act. According to us the same is mandatory, even otherwise, it is consequential in nature, no arguments were advanced on the same, and hence, same is dismissed. 42. Accordingly appeal of the assessee for assessment year 2002 - 03 is dismissed. ITA No 938/Del/2007 Assessment Year 2003- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amed exemption from tax in the return of income. 4. That the Learned CIT(A) has erred both on facts and in law in confirming the levying of the interest of Rs. 1,18,961 /'- under section 234D of the Act. Without prejudice, the interest is computed wrongly resulting in excess levy on the Appellant. 5. That the Learned CIT(A) has erred both on facts and in law in not interfering with the action of the A.O. in initiating penalty proceeding under section 27 IB of the Act. 6. The appellant craves leave to add, supplement, amend, vary, withdraw or otherwise modify the grounds mentioned hereinabove at or before the time of hearing. The Appellant prays for appropriate relief based on the said grounds of appeal and the facts and circumstances of the case." 44. Ground number 1 of the appeal is general in nature and therefore same is dismissed. 45. Ground number 1.1 of the appeal of the assessee against the action of the learned CIT - A confirming the order of the learned AO holding that assessee is not a mutual concern, it is carrying on the business, and therefore the income is liable to tax. Both the parties submitted that the facts of the case are identical to the issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties. In view of this ground number 2 of the appeal of the assessee is dismissed. 51. Ground number 3 is with respect to the levy of interest of rupees for 07340/- u/s 234B of the income tax act, which is consequential in nature, and therefore same is dismissed. 52. Ground number 4 of the appeal is with respect to chargeability of interest u/s 234D of the income tax act, which is consequential in nature, no arguments were advanced by the parties, therefore, same is dismissed. 53. Ground number 5 of the appeal is against the initiation of the penalty proceedings u/s 271B of the income tax act. Assessee cannot be said to be aggrieved by the mere initiation of the penalty proceedings as the assessee will get definitely an opportunity to reply to the show cause notice and thereafter the learned assessing officer will pass a speaking order. Thus ground number 5 of the appeal is dismissed. 54. No arguments were advanced with respect to ground number 6 of the appeal and therefore same is dismissed. 55. Accordingly ITA number 98/Del/2007 for assessment year 2003 - 04 preferred by the assessee is dismissed. ITA No. 4078/Del/2015 Assessment Year 2006-07 56. The assessee has rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said AMP contribution partakes the character of income, it is diverted for a specific purpose (AMP activities) by virtue of a pre-existing obligation attached to the source of such contribution itself and hence the contribution was not exigible to tax. Other Grounds 8. That the Ld. CIT(A) has erred in following the order of the Hon'ble Income Tax Appellate Tribunal in Appellant's own case for AY 2001-02 despite appreciating that there has been change in facts in the current year. 9. That the Ld. CIT(A) has erred in not appreciating the business model of the Appellant and the terms and conditions of the tripartite agreement. 10. That the Ld. CIT(A) has erred in disallowing the provision for doubtful debts amounting to Rs. 2,58,288. 11. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the interest levied by the AO under Section 234B of the Act." 57. Ground number 1 of the appeal is general in nature and therefore same is dismissed. 58. Ground number 2, 3 and 4 are with respect to the argument of the assessee that the income of the assessee is tainted with mutuality and therefore consequently the income would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the charging of interest u/s 234B of the income tax act which is consequential in nature and therefore same is dismissed. 64. Accordingly the appeal of the assessee in ITA number 4078/DEL/2015 for assessment year 2006 - 07 is dismissed. ITA No. 5735/Del/2015 ( AO ) & ITA No 5894/Del/2015 Assessment Year 2008-09 ( Assessee) 65. These are the cross appeals filed by the parties against the order of the Commissioner of income tax (appeals) - 22, New Delhi dated 14/8/2015. The assessee filed its return of income showing taxable income of rupees nil on 30/9/2008. The assessment u/s 143 (3) of the income tax act was passed on 22/12/2010 where the income of the assessee was determined at INR 5 2403120/-. The addition of INR 3 6151479/- was made by the learned assessing officer on account of the unverified sundry creditors and further addition of INR 1 6251645/- was made on account of unverified amount payable to holding company. Further sum of INR 3 9956238/- was added on account of Income not booked by the assessee rejecting the contention of the assessee that it is a mutual concern as well as alternatively the income of the assessee has diverted by overriding title. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent method of revenue recognition. Further the assessee also explained the differences in closing balance and also submitted the certificate of the creditors with respect to payment made to them in subsequent years along with the details of the banks how the payments have been discharged. The learned departmental representative also could not show any infirmity in the order of the learned CIT - A. In view of this we do not find any infirmity in the order of the learned CIT - A in deleting the above addition. Accordingly appeal of the learned assessing officer is dismissed. 69. Now we come to the appeal of the assessee where the assessee has raised the following grounds of appeal in ITA No. 5894/Del/2015 for the Assessment Year 2008-09:- "General Ground 1. That on the facts and in law, the impugned order passed by the Ld. Commissioner of Income Tax (Appeals) -22 ('Ld. CIT(A)') confirming the order of the Assessing Officer ('AO') in not accepting the returned income as Nil, is bad in law. 2. That the Ld. CIT(A) erred in holding that the activities of the assessee are an adventure in the nature of trade. Principle of Mutuality 3. That on the facts and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and in law, Ld. CIT(A) failed to adjudicate upon ground/issue relating to diversion of income by overriding title. 10. That the Ld. CIT(A) failed to appreciate that even assuming that the said AMP contribution partakes the character of income, it is diverted for a specific purpose (AMP activities) by virtue of a pre-existing obligation attached to the source of such contribution itself and hence the contribution was not exigible to tax. Other Grounds 11. That the Ld. CIT(A) has erred in following the order of the Hon'ble Income Tax Appellate Tribunal in Appellant's own case for AY 2001-02 despite the fact that the facts of the current Assessment Year were distinguishable from Assessment Year 2001-02. 12. The Ld. CIT(A) erred in not appreciating that the appellant did not have any commercial element in the activities carried out by it. 13. That the Ld. CIT(A) erred in not appreciating the fact that the sole purpose of the appellant coming into existence was to work as a nonprofit enterprise, working for the mutual benefit of its mutual concerns/members which is further corroborated by the approval obtained by the appellant from the Ministry of Industry, D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appeal of the assessee is with respect to the order of the learned CIT - A not appreciating that the appellant did not have any commercial element in the activities carried out by it. Ground number 13 of the appeal is with respect to the approval obtained by the assessee from the Ministry of industry, Department of industrial policy and promotion as a non-profit enterprise. Ground number 14 is with relation to the non-appreciation of the fact by the lower authorities about the business model of the appellant and the terms and condition of the tripartite agreement. Ground number 15 -16 are with respect to the order of the lower authorities holding that amount payable to the holding company of INR 1 6251645/- is in the nature of revenue receipts. All these grounds are covered by the ground number 3 - 10 of the appeal of the assessee for this year wherein we have dismissed these grounds. Accordingly ground number 11 - 16 of the appeal of the assessee. 74. Ground number 17 is against the charging of interest u/s 234B of the income tax act, which is consequential in nature, and therefore this ground of appeal is dismissed. 75. Accordingly ITA number 5894/del/2015 filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an advertising contractor and was allegedly rendering services for which it was receiving money with a profit element in it. 7. The on the facts and circumstances of the case, Ld. CIT(A) erred in holding that the assessee is not functioning as a mutual concern by not appreciating the law laid down by the Apex Court in the case of CIT v Bankipur Club Ltd, 226 ITR 97. Every' receipt is not income 8. That, without prejudice, on the facts and in law, the Ld. CIT(A) erred in not appreciating that even' receipt in the hands of an assessee does not partake the character of income. Diversion of Income by Overriding Title 9. That the on the facts and in law, Ld. CIT(A) failed to adjudicate upon ground/issue relating to diversion of income by overriding title. 10. That the Ld. CIT (A) failed to appreciate that even assuming that the said AMP contribution partakes the character of income, it is diverted for a specific purpose (AMP activities) by virtue of a pre-existing obligation attached to the source of such contribution itself and hence the contribution was not exigible to tax. Other Grounds 11. That the Ld. CIT(A) has erred in following the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the lower authorities. For the similar reasons we dismiss this ground of appeal. 80. Ground number 15 of the appeal of the assessee is with respect to the disallowance of INR 1 397806/- on account of doubtful -. The learned assessing officer disallowed the above sum holding that it is a mere provision for doubtful - and therefore same is not an allowable. The learned CIT - A did not adjudicate the same. No arguments were advanced before us also. Therefore we dismiss the same. 81. Ground number 16 is against the charging of interest u/s 234B of the income tax act, which is consequential in nature, and no arguments were advanced by the assessee on this ground. Accordingly same is dismissed. 82. Accordingly ITA number 5895/del/2015 for assessment year 2009 - 10 filed by the assessee is dismissed. ITA No. 4079/Del/2015 Assessment Year 2010-11 83. The assessee has raised the following grounds of appeal in ITA No. 4079/Del/2015 for the Assessment Year 2010-11:- "General Ground 1. That on the facts and in law, the impugned order passed by the Ld. Commissioner of Income Tax (Appeals) -17 ('Ld. CIT(A)') confirming the order of the Assessing Officer ('AO') a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appreciating that there has been change in facts in the current year. 9. That the Ld. CIT(A) has erred in not appreciating the business model of the Appellant and the terms and conditions of the tripartite agreement. 10. That the Ld. CIT(A) has erred in disallowing the provision for doubtful debts amounting to Rs. 4,94,434. 11. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the interest levied by the AO under Section 234B of the Act." 84. Ground number 1 of the appeal is general in nature and therefore same is dismissed. 85. Ground number 2 - 4 of the appeal relates to the argument of the assessee that the income on by the assessee is tainted with the principle of mutuality and is not chargeable to tax. Both the parties it was the same argument and also submitted that there is no change in the facts and circumstances of the case, to the facts and circumstances for assessment year 2001 - 02 in 2002 - 03. We have already decided this issue against the assessee in the about two assessment years holding that income of the assessee is not covered by the principles of mutuality and are chargeable to tax. Accordingly we confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That on the facts and in law, the Ld. C1T(A) has erred in concluding that the 'principle of mutuality' could not be applied owing to the fact that YRIPL and Pepsi Foods Ltd do not benefit from the AMP activities rendered by the Appellant, which finding is contrary to the facts on record. 5. That on the facts and in law, the Ld. CIT(A) has grossly erred in not recognising that in the current assessment year the increase in the sales and net royalty income of YRIPL bore a direct nexus to the AMP activities carried on by the Appellant, and as such the benefit to YRIPL was clearly established. 6. That on the facts and in law, the Ld. CIT(A) has grossly erred in not appreciating that Pepsi Foods Ltd. also benefited from the exclusive right to sell its products granted as per the terms and conditions of the 'Pepsi Beverage Supply Agreement' and as such all conditions relating to the mutuality concept stood satisfied. 7. That on the facts and in law, the Ld. CIT(A) has grossly erred in concluding that the appellant has failed to give the workings of contribution of Pepsi vis-a-vis sale of Pepsi products at restaurant outlets of the franchisee and its parent company i.e. YRIPL. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the similar reasons we also hold for this year too that income of the assessee is not intend with the principles of mutuality and is also not diverted by overriding title but is chargeable to tax. Accordingly ground number 1 - 15 of the appeal of the assessee is dismissed for the similar reasons. 92. Ground number 16 of the appeal is with respect to the action of the learned CIT - A concluding that revenue is to be recorded on accrual basis without appreciating the fact that the same needs to be adjusted against the deficit. No arguments were advanced before us on that issue however the assessee has placed written submission stating that ground number 16 is without prejudice to the contention of the appellant that it is functioning as a mutual concern, the learned CIT - A as and in not allowing the loss of rupees 117497849/- as held by the honourable CIT - A in the appellant's own case in assessment year 2008 - 09 and 2009 - 10, thus has added by not following the principles of consistency. The assessee has altogether raised any previous us without making any application for raising an additional ground of appeal and therefore we do we are not inclined to consider the same. How ..... X X X X Extracts X X X X X X X X Extracts X X X X
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