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2019 (9) TMI 551

..... income of the assessee chargeable to income tax under the income tax act? - claim of ‘diversion by overriding title‘ - HELD THAT:- 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 requirement of contribution by this franchisee to the assessee. Even there is a condition which gives the right to the assessee to terminate this agreement in the even any amount is not paid by franchisee to the assessee. Even the payment of the contribution was also required to be supported with statement of sale is directed by the assessee from time to time. According to clause number 4.2 of the agreement the holding company shall pass on to assessee any rebates received by the holding company from adve .....

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..... o us the above issue raised before us in ground number 1 (b) of the grounds of appeal has already reached finality and we are barred by the principle of finality and to an extent the doctrine of merger. We dismiss ground number 1 (b) of the appeal of the assessee only on the issue of principles of finality and doctrine of merger. Application for admission of the additional evidences - Tribunal is empowered to admit the additional evidences if other substantial cause justifies the admission of those evidences. In the present case, we find that to determine the correct facts of the whole case if the assessee, could not produce the fact that its holding company and the Pepsi foods 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. Income of contribution from franchisee - For the similar reasons as given by us with respect to the holding company of the assessee, the contribution of the Pepsi foods Ltd is also tinged with commercial considerations. The honourable High Court has held that that principle .....

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..... elf 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. Addition on account of unverified S. Creditors - HELD THAT:- Before the learned CIT - A the assessee explained the differences which is mainly due to the different accounting principles covering income and expenses by the appellant and the creditors and further the learned CIT - A has admitted the additional evidences and also obtained the remand report. In fact 10/19 creditors confirmed balance though there were some differences in the closing balances in view of cases due to different 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 d .....

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..... 4,44,002/- being excess amount of income over expenditure. The said surplus had arisen on account of advertisement contributions received from the holding company of the assessee- company which remained unexpended. 2.1 The broad facts with respect to the above case have been delineated in the connected appeal entitled Yum! Restaurant (India) Pvt Ltd vs CIT; being ITA No. 192/2009, which was heard along with the present appeal. Judgment was reserved in both the appeals. 3. Briefly, the parent company, that is, Yum! Restaurant (India) Pvt Ltd (in short YRIPL ) formerly known as Tricon Restaurants India Pvt Ltd was incorporated on 17.03.1994. The YRIPL had a license arrangement with Kentucky Fried Chicken International Holdings, Inc. (in short KFC ) and Pizza Hut International LLC (in short PHILLC ). The YRIPL sought permission from the Government of India, Ministry of Industry, Department of Industrial Policy and Promotion, Secretariat for Industrial Assistance (SIA), Foreign Collaboration, for setting up a wholly owned step-down subsidiary to manage retail restaurant business, for advertising and promotion at local store level, regional level and national level. By a letter dated 05 .....

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..... 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. Notwithstanding the aforesaid the executive committee of any Brand (constituted under Article 7 of this Agreement) may, by a three fourth majority, which shall be binding on all franchisees of Tricon including the franchisee, require the franchisee to pay the advertising contribution in advance. For the avoidance of doubt it is clarified and agreed that while recommending advance payment of advertising contribution the chairman will not have a casting vote. Franchise will spend an additional 1% of Revenues, in the manner directed by Tricon and/or TRIM in writing from time to time, on such local store marketing, advertising, promotional and research expenditure proposed by franchisee and approved in advance by Tricon and/or TRIM during the relevant accounting period, in accordance with the requirements and guidelines set out in the manuals, provided that if franchisee fails to spend the full amount as directed by Tricon and/or TRIM franchisee will pay the unspent amount to TRIM within the period specified in a written demand from TRIM. Upon receipt of the u .....

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..... nil . The income and expenditure account as recorded in the order of the Assessing Officer read as follows:- INCOME Advertising contribution from franchises, Holding company and key associates 26469546 EXPENDITURE Advertising, Marketing and Promotional 21256032 Expenditure Preliminary expenses 454992 Administrative and other expenses 190272 21901296 Excess of expenditure carried forward from the (124248) Previous year Excess of income/ (Expenditure) over 4444002 (expenditure)/income carried forwarded to the Balance sheet (included under current Liabilities) 3.4 With the return the assessee-company had appended the notes broadly indicating that it was operating on principles of mutuality and on no-profit basis. The note further read that there was a complete identity between the contributors and the receipts of the fund, that is, the assessee-company. The assessee-company rendered services exclusively to the franchisees and that the franchisees had exclusive right over the surplus. The outlet of the franchisee did not derive any profit from the funds. The funds of the assessee-company could only be used for meeting expenses on their behalf or be returned to them. 4. The Assessing O .....

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..... see-company was also informed about nonsubmission of details by Pepsi Foods Ltd. vide order sheet entry 05.03.2004. It is pertinent to mention here that as per details of contributions filed by the assessee company M/s Pepsi Food Ltd's Marketing Contributions of ₹ 32.70 lacs was received by YRIPL. All the above findings make it clear that the assessee company was not operating in terms with the SIA approval. It was seen from the details of accrued marketing filed by the assessee company during the course of assessment proceedings u/s 143(2) of the Income Tax Act, 1961 in the case of M/s Yum! Restaurants India Pvt Ltd pending before this office that not all the franchises are paying 5% of their revenues: e.g. M/s Devyani International Private Limited and Specialty Restaurants were paying contribution @ 4% instead of 5% as prescribed in the tripartite agreement. All the participants to the so-called brand fund or so-called 'mutual concern' should have been contributing equally or an equal proportion. It is further seen that as for clause 3 of SIA letter as reproduced in para VI.1 of this order the franchisees and YRIPL were required to make contribution of affix (a .....

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..... come over expenditure was not taxable. The Tribunal noted that in the present case the principle of mutuality was not applicable on account of the fact that apart from contributions received from various franchisees contributions to the extent of 32.70 lacs had also been received from Pepsi Foods Ltd as also from YRIPL, who were neither franchisees nor beneficiaries. As per the tripartite agreement, it noted that contributions were received from YRIPL, that is, the parent company that was not under any obligation to pay. Therefore, the essential requirements of a mutual concern were missing. This was especially so that since Pepsi Food Ltd and YRIPL who was a contributor to the fund did not benefit from the APM activities. Thus, the Tribunal held that the principles of mutuality being not applicable to the excess of income over expenditure were required to be taxed. 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 m .....

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..... decision of the honourable Gujarat High Court in case of Nirma Industries Ltd Vs DCIT 283 ITR 402 and the decision of special bench of the tribunal in Medicare investment Ltd vs JCIT 304 ITR (AT) 44, coordinate bench noted that the above ground was not found to have been not pressed , non-disposal of the said ground amounts to a mistake apparent on record. Therefore, even subsequent to the decision of Honourable High court , coordinate bench recalled the order partially to the extent that the said ground would be decided on merit and for this purpose, the registry was directed to post the case for the hearing. Thus, now therefore the ITA number 32345/Del/2005 for assessment year 2001 - 02 is listed for hearing before us. 6. The only ground to be adjudicated is :- 1. the learned Commissioner of Income-tax (Appeals) has erred both on facts and in law: (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 7. Adverting to the above ground, the learned authorised representative submitted a detailed note contending that the .....

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..... any right or discretion or dominion over them. Therefore, there arises no question of any income accruing in the hands of the appellant. In this regard, the relevant extract from the tripartite operating agreement (Clause 8.4 and Clause 8.5) have also been reproduced above. d. In this regard, reliance is placed on the landmark judgment of the Hon ble Supreme Court in the case of CIT vs. Bijlii Cotton Mills (116 ITR 60). In this case, the assessee company used to collect certain 'dharmada' charges compulsorily at the time of every sale made to its customers, which were credited to a separate account to be subsequently incurred by it on charitable activities. The issue that arose for consideration was whether the amounts received by the assessee on account of 'dharmada charges were taxable in its hand. The Hon ble Apex Court, while analyzing the various aspects emerging out of the issue. interalia held that as the assessee was under a compulsory obligation to spend the amount received on charitable activities, the same cannot be regarded as income in its hand. The relevant extract of the judgment is reproduced hereunder for your honour s ready reference: In other words, .....

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..... by way of an overriding title: i. CIT vs. Sitaldas Tirathdas (Supreme Court) (41 ITR 367) In our opinion, the true test is whether the amount sought to be deducted, in truth, never reached the assessee as his income. Obligations, no doubt, there are in every case, but it is the nature of the obligation, which is the decisive fact. There is a difference between an amount, which a person is obliged to apply out of his income, and an amount, which but the nature of the obligation cannot be said to be a part o f the income of the assessee. Where by the obligation income is diverted before it reaches the assessee, it is deductible ; but where 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. It is the first kind of payment which can truly be excused and not the second. The second payment is merely an obligation to pay another a portion of one's own income, which has been received and is since applied. The first is a case in which the income never reaches the assessee, who even if he were to collect it, does so, not as part of his income, but for and on behalf of the person to whom it .....

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..... d before us that the Department has allowed the expenditure incurred by the assessee out of the ADF on the actual basis treating the same as a business expenses. As we have held that, the amount collected under the ADF is not a trading receipt in the hands of the assessee hence, the deduction given by the Assessing Officer in the respective assessment years towards ADF is to be withdrawn. The Assessing Officer is accordingly direct to exclude fully the amount included towards Area Development Fund in the income of the assessee and also to withdraw the amount allowed as business expenditure towards ADF. Accordingly the assessee succeeds on this issue. h. Further, reference may also be drawn to the recent judgment of the Apex case in the case of DCIT vs T Jayachandaran (Supreme Court) (Civil Appeal no. 4341-4344, 4346- 4357 of 2018), held that only income that has actually accrued to the assessee is taxable. What income has really occurred to be decided, not by reference to physical receipt of income, but by the receipt of income in reality. The fact that there is no written agreement to show that the assessee was acting as a broker is not relevant. The relationship of the assessee v .....

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..... ferred to the decision of the coordinate bench and submitted that in absence of these evidences only the coordinate bench has upheld that there is no such mutuality concept applicable to the income received by the assessee. He therefore submitted that the additional evidences may be admitted and adjudicated. 9. The learned departmental representative vehemently opposed the ground of the appeal on several counts. He stated that when the honourable High Court has already decided the issue, the principles of finality say that now this issue cannot be decided. For this proposition, he relied upon the principles of constructive res judicata. He submitted a written note as under:- A.Y. 2001-02 3. In A.Y. 2001-02, the assessment order was passed u/s 143(3) on 29.03.2004 at total income of ₹ 48,98,484/- as against nil income declared by the assesse in the return of income. In its Income & Expenditure account, income of ₹ 2,64,69,546/- has been shown from advertising contribution from franchisees, holding company and key associates as against which advertising. Marketing and promotional expenses of ₹ 2,12,56,032/- has been shown. Excess of income over expenditure has b .....

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..... he ground that ground of appeal no. 1(b) of the assesse regarding diversion of income by overriding title was not adjudicated by the ITAT and therefore, the ITAT should rectify its earlier order under of the Act. In its order dated 31.03.2010 under section 254(2), the ITAT partially recalled its order to decide the aforesaid ground of appeal no 1(b) on merit. This appeal is being heard now after 21 adjournments taken over a period of 9 years from the date of the order u/s 254(2). Constructive Res Judicata 8. In this connection, it is to submit that the matter in issue in this case is squarely covered by the principle of constructive res judicata. In this context, kind attention is drawn to Explanation IV to Section 11 of The Code of Civil Procedure, 1908 which reads as under Explanation IV.- Any matter which might and ought to have been made ground of defense or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit. 9. Essentially, matter in issue in this case is taxability of surplus of income over expenditure in respect of advertising contributions / receipts. As per the provisions of CPC, Matter in issue is the rights l .....

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..... ure in respect of advertising contributions receipt is taxable or not and to prove that the assessee has taken two grounds of defense. 11. The ITAT considered the arguments of the assessee and held that assessee is not a mutual concern and therefore, its income was taxable. Though 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 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. 12. Since the matter in issue in this case is whether surplus of income over expenditure in respect of advertising contributions / receipt is taxable or not, it will be assumed that any matter which might and ought to have been made ground of defense in this suit before the Hon ble Delhi High Court shall be deemed to have been a matter directly and substantially in issue in such suit Therefore, in respect of taxability of surplus income it shall be assumed that not only to points upon which the Hon ble Delhi High Court was actually require .....

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..... nd final not only as to the actual matter determined but as to every other matter which the parties might and ought to have litigated and have had (sic) decided as incidental to or essentially connected with (sic) 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.. 14. Further, in the case of Forward Construction Co. & Ors vs Prabhat Mandal (Regd.) Andheri & .Ors 1986 AIR 391, 1985 SCR Supl. (3) 766, the Hon ble Supreme Court of India held as under So far as the first reason is concerned, the High Court in our opinion was not right in holding that the earlier judgment would not operate as res judicata as one of the grounds taken in the present petition was conspicuous by its absence in the earlier petition. Explanation IV to s. 11 C.P.C. provides that any matter which might and ought to have been made ground of defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit. An adjudication is conclusive and final not only as to the actual matter determined but as to every other matter which the parties mi .....

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..... of res judicata also comes into play when by the judgment and order a decision of a particular issue is implicit in it, that is, it must be deemed to have been necessarily decided by implication; then also the principle of res judicata on that issue is directly applicable. When any matter which might and ought to have been made a ground of defense or attack in a former proceeding but was not so made, then such a matter in the eye of law, to-avoid multiplicity of litigation and to bring about finality in it is deemed to have been constructively in issue and, therefore, is taken as decided (emphasis supplied) 17. In the case of Ramadhar Shrivas v Bhagwandas (2005)13 SCC1, it has been held by the Supreme Court as under The expression 'matter in issue under Section 11 of the Code of Civil Procedure, 1908 connotes matter directly and substantially in issue actually or constructively. A matter is actually in issue when it is in issue directly and substantially and a competent court decides it on merits. A matter is constructively in issue when it 'might and ought to have been made a ground of defense or attack in the former suit. Explanation IV to Section 11 of the Code by a dee .....

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..... acted according to the said scheme and cannot be subjected to reversal after a period of 7 years by virtue of the principle of 'res judicata' , 'constructive res judicata' and 'acquiescence'. In this regard, the Id AR placed reliance on the decision of Hon'ble Supreme Court in the case of Forward Construction Co. v. Prabhat Mandal AIR 1986 SC 391 wherein it was held that: The principle underlying Explanation IV is that where the parties have had an opportunity of controverting a matter that should be taken to be the same thing as if the matter had been actually controverted and decided. It is true that where a matter has been constructively in issue it cannot be said to have been actually heard and decided. It could only be deemed to have been heard and decided. We find that in the instant case, the income tax department had the opportunity to controvert the specific clause mentioned in para 10(iii) in the scheme of amalgamation, when the scheme was presented before the Hon'ble High Court for approval. Thus applying the principles of res judicata as explained by the Hon'ble Apex Court in the aforesaid case, the issue can be deemed to be heard an .....

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..... ied) 20. The attempt to re-argue the case, which has been finally decided, by the Hon ble ITAT and Delhi High Court is a clear abuse of process of the Court, regardless of the principles of Res Judicata. In this connection, relevant portions of the order of Hon'ble Supreme Court in the case of K.K. Modi v. K.N. Modi [1998] 3 SCC 573 is extracted below - The Supreme Court Practice 1995 published by Sweet & Maxwell in paragraph 18/19/33 (page 344) explains the phrase abuse of the process of the court thus: This term connotes that the process of the court must be used bona fide and properly and must not be abused. The court will prevent improper use of its machinery and will in a proper case, summarily prevent its machinery from being used as a means of vexation and oppression in the process of litigation The categories of conduct rendering a claim frivolous, vexatious or an abuse of process are not closed but depend on all the relevant circumstances. And for these purpose considerations of public policy and the interests of justice may be very material. One of the examples cited as an abuse of the process of court is re-litigation. It is an abuse of the process of the court a .....

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..... sfy the strict rule of res judicata or the requirement of issue estoppels.(emphasis supplied) Applicability of Explanation V to Section 11 of Code of Civil Procedure,1908 21. In this matter, attention is also drawn to the following portion of para 4 of the aforesaid rectification order under section 254(2) of the Act dated 31.03.2010 - 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 purpose, he invited our attention to page 4 of the appeal memo filed before the High Court wherein the contention was so raised. He accordingly submitted that since in the appeal before the High Court the issue was raised in ground no 1(b) was not taken, to that extent the order of Tribunal has not merged into the order of High Court. As admitted by the assesse, in its pleading before the Hon ble High Court the ground of diversion of income by overriding title was mentioned and also the fact about its pending MA before the ITAT. The Hon ble High Court considered the pleadings of the assesse and passed an order holding that income of the assesse .....

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..... ground no 1(b) was not taken, to that extent the order of Tribunal has not merged into the order of High Court. 24. It is pertinent to note that once a pleading has been taken before the Hon ble High Court in respect of a matter, the order of the ITAT gets merged with the order of the High Court and that matter attains finality. The assesse included its pleading of diversion of income by overriding title was in its appeal memo. The assesse also mentioned about its pending MA in its appeal memo. If any mistake is noticed by the party in the order of the High Court, only recourse left was to file revision petition before the High Court or to file an appeal before the Supreme Court , but by no stretch of imagination any rectification appeal will lie before the ITAT against any alleged apparent mistake in the order of the High Court In this case, matter in issue is taxability of surplus of income over expenditure in respect of advertising contributions receipts. Once that matter has been adjudicated and decided by the High Court, the order of the ITAT merged with the order of the High Court. 25. In this connection, reliance is placed on the very recent order dated 25.02.2019 of the Jur .....

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..... 2014; that rectification application was allowed on 26-03-2015. 25. To this court it appears that the assessee's claim for rectification is precluded by the doctrine of finality and not merely merger. Once the additions were upheld on merits, the second innings as it were before the tax authorities, which have the effect of unsettling binding decisions of higher courts, cannot be countenanced. In that, sense the issue of merger applies. In the facts of this case, this court is of opinion that the doctrine of finality applies as well. The assessee by conduct in not seeking remedy for the dismissal of its cross objection and speculatively waiting for the outcome of the revenue's appeal, cannot be heard to complain that its grievance with respect to reassessment remained unaddressed. The court is conscious that it is not dealing with an uninformed litigant; instead, it is advised by counsel. Furthermore, the court notices that the first ITAT order was by two members (M/s C.L. Sethi and Shamim Yahya). The application made under Section 254 for rectification was heard and disposed by two others (M/s C. M. Garg and N.K. Saini). 26. This court further notices that there is a diffe .....

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..... ion to dismiss the cross appeal as infructuous was a mistake in the light of the subsequent reversal of its order on the merits of the addition, is not in the considered view of this court, a mistake or error warranting rectification. This court deprecates in the strongest terms, the invocation of the power of rectification. 27. It may be noted that the facts in the aforesaid case are very similar to the instant case. As mentioned above, the ITAT passed the order on 31.01.2008. The Hon ble Delhi High Court passed the order on 01.04.2009 against the assessee. After that, the MA of the assessee was heard before the ITAT. The issue has already reached finality by the order of the High Court. Therefore, the rectification order of the ITAT was barred by the principle of finality and also by the doctrine of merger. 28. In Commissioner of Income-tax, Bombay Vs. M/s Amritlal Bhogilal and Co. AIR 1958 SC 868 the Hon ble Supreme Court held as under: 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 .....

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..... urt held that though the order of assessment made by the ITO was appealed against before the Commissioner (Appeals), the order of registration was not appealable at all and, therefore, the order granting registration of the firm cannot be said to have been merged in the appellate order of the Commissioner (Appeals). While doing so, this Court analyzed several provisions of the Income-tax Act, 1961 so as to determine the nature and scope of the relevant appellate and revisional powers and held that if the subject matter of the two proceedings is not identical, there can be no merger. In State of Madras v. Madurai Mills Co. Ltd. AIR 1967 SC 681 this Court held that the doctrine of merger is not a doctrine of rigid and universal application and it cannot be said that wherever there are two orders, one by the inferior authority and the other by a superior authority, passed in an appeal or revision, there is a fusion or merger of two orders irrespective of the subjectmatter of the appellate or revisional order and the scope of the appeal or revision contemplated by the particular statute. The application of the doctrine depends on the nature of the appellate or revisional order in each .....

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..... ed of the list before it either way - whether the decree or order under appeal is set aside or modified or simply confirmed, it is the decree or order of the superior court, Tribunal or authority which is the final, binding and operative decree or order wherein merges the decree or order passed by the Court, Tribunal or the authority below. However, the doctrine is not of universal or unlimited application. The nature of jurisdiction exercised by the superior forum and the content or subject matter of challenge laid or which could have been laid shall have to be kept in view. It has been further held that Where an appeal or revision is provided against an order passed by a Court, Tribunal or any other authority before superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law. 30. Further, reliance is also placed on the order of the Hon ble Supreme Court in the case of Indian Council for Enviro-Legal Action v. Union of India & Ors. [2011] INSC 626 ( .....

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..... and permit the unsuccessful litigant to re- agitate and reargue their cases. 31. In the instant case, the matter in issue has already been decided by the Hon ble High Court and therefore, the order of the ITAT merged with the order of the Hon High court. 32. Considering the above facts and decisions of Hon ble Supreme Court and High Courts, income of the assessee Where by the obligation income is diverted before it reaches the assessee, it is deductible; but where 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. It is the first kind of payment, which can truly be excused, and not the second. The second payment is merely an obligation to pay another a portion of one's own income, which has been received and is since applied The first is a case in which the income never reaches the assessee, who even if he were to collect it, does so, not as part of his income, but for and on behalf of the person to whom it is payable. In our opinion, the present case is one in which the wife and children of the assessee who continued to be members of the family received a portion of the income .....

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..... me accrued, arisen or received amounts merely to the apportionment of income and the income so applied is not deductible. There is a difference between an amount which a person is obliged to apply out of his income and an amount which, by the nature of the obligation, cannot be said to be a part of his income. Where by the obligation income is diverted before it reaches the assessee, it is deductible; but where 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. 36. It may be noted that the assesse has shown receipts on account of advertisement in its P&L account against which different expenses have been claimed. It was the income of the assessee and being in the business of advertisement and publicity, the funds received have been utilized and applied towards expenses pertaining to advertisement and publicity. There is no question of diversion of income by overriding title. The receipts were always shown in P&L account and against which different expenses were claimed. 37. In the landmark case of CIT v Sitaldas Tirathdas [1961] 41 ITR 367 (SC), the Hon ble Supreme Court held .....

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..... thing but an 'application of income' by assessee and not a 'diversion of income at source by overriding title' in favour of Diageo India.[Para 25] * It is only 'application of income' and not 'diversion of income' by overriding title at source. The terms of the Agreement are very carefully crafted and intelligently drafted and they may at first blush give an impression of an overriding title over income in favour of Diageo India, but on a closer and deeper scrutiny, it is nothing but a devious diversion, falling short of the legal prerequisites for taking it out of the ambit and charge of the Income Tax Act in the hands of the respondent assessee.[Para 26] * The source of income is the manufacture and sale of liquor under the Excise Licence, where Diageo India has no privity or locus. Therefore, whatever income is generated out of the said business has to be first taxed in the hands of the Excise License and after payment of the Income tax, the 'distribution of surplus' between the two parties, is their discretion and if the assessee gets its share of total profits only to the extent of ₹ 45 per case in the name of bottling charges and .....

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..... ts and expenses are shown in P&L account. However, surplus of income over expenditure is not offered to tax. 40. In this regard, reliance is also placed on the order of High Court of Kerala in the case of Fr. Sunny Jose V UOI [2015] 60 taxmann.com 386(Kerala). The relevant portion of the said order is extracted below > 16. In the light of the principles that can be culled out from the decisions referred to above, I am of the view that for the concept of diversion of income by overriding title to apply, the diversion of income must be effective at the stage when the amount in question leaves the source, on its way to the intended recipient. At that stage, on account of a pre-existing legal obligation, the amount should be diverted to another, who can claim it as of right, based on the pre-existing legal arrangement. The person to whom the amount is diverted should have a legal right that entitles him to claim the amount directly from the source, and without the intervention of the person who would have received the amount but for the said legal arrangement. Viewed from that angle, the nature of the receipt would also have a bearing on the issue of whether the amount in questi .....

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..... on 01/04/2009 and thereafter on 10/07/2009 the assessee revised its miscellaneous application the coordinate bench decided the miscellaneous application on 31/03/2010 by recalling the order of the coordinate bench which was merged with the order of the honourable High Court on 01/04/2009. He submitted that the order of the miscellaneous application of the coordinate bench recalling its order is giving a back door entry to the assessee. He extensively referred to para number 28 of the decision of principal Commissioner of income tax vs NR portfolio private limited (2019) 103 taxmann.com 17 (Del). He further extensively referred the order of the honourable Delhi High Court in that case where the principle of finality is discussed. He therefore submitted that for this assessment year the matter has reached the finality and therefore now tinkering with the concluded issues is not permitted. 44. On the issue of the decision relied upon by the learned authorised of CIT vs Bijlii cotton Mills 116 ITR 60 he submitted that the facts of this case are distinguishable as in that particular case the sum was credited to a separate account and never to the profit and loss account whereas in the p .....

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..... bmitted that therein income but it has never accrue to the assessee because of the diversion of overriding title over the same. On advertisement marketing promotion activities. He submitted that both these arguments are contradictory to the each other and therefore as the argument of the mutuality has been already rejected by the coordinate bench as well as found by the honourable High Court, even otherwise, the argument of the assessee of diversion of income by overriding title also deserves to be rejected. 10. The learned authorised representative in rejoinder submitted that:- a. On the principles of constructive res judicata and the argument that the order of the coordinate bench has merged with the order of the honourable High Court, he submitted that now this argument cannot be taken up when the revenue has accepted the order of the miscellaneous application and its decision in 2010. Now as the matter is recalled by the coordinate bench, the only option available with the coordinate bench is to decide/adjudicate the issue for which the matter has been recalled. b. He further stated that the sequence of events narrated by the learned departmental representative is not correct. .....

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..... e above sum is a mutual receipt and not an income of the assessee is for the reason that Pepsi was not found to be contributing to the advertisement pool of the assessee, and therefore such evidences now filed clearly shows that Pepsi is also contributing for the same. g. He further submitted that the learned CIT DR has argued that the issue has reached finality. He submitted that such argument is devoid of any merit as only issue decided by the honourable High Court was with respect to the income of the assessee whether tainted with mutuality ought not. He submitted that whether it is an income of the assessee or not is not at all reached finality and therefore the principle of finality argued by the learned CIT DR is misplaced. 11. We have carefully considered the rival contentions and perused the orders of the lower authorities. We have also carefully considered the decision of the honourable Delhi High Court in appeal preferred by the assessee against the order of the coordinate bench. We have also noted the fact that honourable Supreme Court has granted leave to the assessee against the order of the honourable High Court. Concurrently, the learned CIT - A, the coordinate bench .....

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..... se agreements with the onus of the respective trademarks for the use of the trademarks in the advertising, media and marketing activities envisaged under this agreement. As requested by the holding company all the franchisees has agreed to pay to the assessee the advertising contribution to enable assessee to undertake advertising, media and marketing activities and holding company has agreed to provide assessee certain marketing technical and financial services as per clause 4 and 6 associated with the activities of the assessee. And for these reasons to pursue above objectives and plans and for the mutual benefit of the franchisees assessee was developed as a nonprofit making entity engaged in operation and management of the regional and national level advertising, media and marketing of the brands. According to the agreement the advertising contribution means the advertising contribution which franchisee has agreed to pay to the holding company pursuant to the franchisee agreements. Therefore it is apparent that according to that agreement there is an agreement by the franchisees to pay certain sums to the holding company in terms of their franchisee agreement with the holding c .....

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..... eement the holding company shall pass on to assessee any rebates received by the holding company from advertisement and marketing companies and attributable to the AMP activities during the terms of this agreement further the board of director of the assessee company shall also be nominated by the holding company and the holding company has reserved its rights to nominate one representative of 2 franchisees on a rational basis further in clause number 7.5 of the agreement there is a binding requirement of increase in the contribution by the franchisee. It is also interesting to note at para number 8.1 of the ago above agreement which provides that:- 8.1 it is agreed between the parties hereto that TRIM ( Assessee ) shall make best efforts, but shall not be obliged to allocate the advertising contributions and expenses met out of the Brand funds on the basis of the revenue generated by each franchisee of TRicon (holding company) including franchisee…. Further according to para number 8.4 in the event there is any surplus leftover in any of the Brand funds at the end of an accounting period, the assessee shall be entitled to retain the surplus to be spent on AMP activities dur .....

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..... t to the decision of The Honourable High court entertained the miscellaneous application of the assessee and recalled the order originally passed by ITAT. Thus when the issue is admitted and decided by the Honourable High court or Hon supreme court according to us , we are not empowered at all to touch up on any aspect of the issues decided by those Honourable higher judicial forums. 14. Further an issue, which has already been decided by the honourable high court, whether tribunal is empowered to touch up on any aspect of that matter while adjudicating MA or even in a recalled order. The honourable High Court in para number 2 of order has categorically held that the only issue, which arose in this case, is with respect to the taxability of ₹ 4444002/- being excess amount of income over expenditure. The said surplus had arisen on account of advertisement contribution received from the holding company of the assessee company, which remained unexplained. Therefore on reading of the above paragraph number 2 it is clear that the taxability of the sum of ₹ 4444002/- has already been decided by the honourable High Court. Even before the honourable High Court the assessee did .....

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..... nding of the higher judicial forum. Therefore it will create a situation of confusion and as we understand, it is improper for us to consider any aspects of taxability of the sum, which was already decided by the Honourable High court. We do not have any other power also to make any decision, which will override the issue as decided by the higher forum. Such overriding power is absent in the hands of the tribunal whose authority is to amend and rectify its order. However when such an order has been challenged before the higher forum and higher forum adjudicate it on the issue, our understanding is that, the tribunal is precluded from dealing with any of the matter relating to the aspect of that particular ground. It cannot be said that if one alternative has failed, the assessee can agitate the alternative contention about the taxability of the same income, which has been considered by the higher forum. Thus, according to us the above issue raised before us in ground number 1 (b) of the grounds of appeal has already reached finality and we are barred by the principle of finality and to an extent the doctrine of merger. 15. Further assessee has also not agitated about the non-taxabi .....

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..... facts and in law in not appreciating that receipts amounting to ₹ 78,429,361 which represent advertising contribution received from the franchisees and Yum! Restaurants India Private Limited ( YRIPL ) - the Appellant s holding company are in fact diverted at source by overriding title , and therefore the surplus over expenditure is not liable to tax. 4. The learned Commissioner of Income tax (Appeals) has erred both on facts and in law in not contravening the following contentions of the Appellant and yet confirming the order of the Assessing Officer: 4.1 The contributions by YRIPL to the Appellant are not contradictory to the terms of the approval granted by the Secretariat of Industrial Assistance, Government of India and the tripartite Operating Agreement between the Appellant, YRIPL and the franchisees [Ground 1.3 of the Grounds of Appeal filed before the Commissioner of Income-tax (Appeals)]. 4.2 The Appellant and YRIPL were, in fact, considered as two different entities by the franchisees [Ground 1.4 of the Grounds of Appeal filed before the Commissioner of Income tax (Appeals)]. 4.3 The Appellant has not been used as a tool to evade tax on excess of income over expendi .....

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..... of the coordinate bench were not borne out of any records nor was this e basis of rejection of the appellant s plea by the lower authorities. Moreover the assessee was not afforded an opportunity to clarify the position with regard to these observations. Further since the facts and circumstances of the case for this year under consideration by the audited bench remains the same, these additional facts and evidences which were overlooked by the coordinate bench while passing the appeal order for assessment year 2001 - 02 would be critical to the outcome of the matter. He submitted that there was no opportunity to file the additional evidences before any of the authorities below, since the basis of the rejection of the appellant s plea was for all together different reasons. He thus submitted that it is necessary to adjudicate the issue of mutuality to admit the additional evidences. 24. Adverting to the additional evidences, The assessee further submitted that the holding company is in the business of developing and managing restaurant franchisee in India. For this purpose it has obtained a license from Kentucky fried chicken international Holdings, incorporation. and Pizza Hut Int .....

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..... ry should be a beneficiary in the same manner or even the same extent as the other contributors. He therefore submitted that additional evidences furnished conclusively proves that both the holding company and Pepsi foods Ltd also are covered under the mutuality concept. 25. The learned departmental representative vehemently objected to the submission of the additional evidences and submitted that assessee has every opportunity before the lower authorities to submit those additional evidences; however, the assessee did not care to submit them. He submitted that neither before the learned CIT - A, the assessing officer those evidences were laid. Thus, the assessee should now be precluded from submitting the above evidence afresh. He submitted that the transactions with the holding company were discussed by the assessee before the assessing officer therefore it cannot be said that assessee did not have any opportunity of submitting them. He extensively referred to the order of the learned assessing officer. He further referred to the order of the learned CIT - A wherein in para number 7 wherein the above issue is also discussed. 26. With respect to the additional evidences submitted .....

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..... nt company i.e., YRIPL, which has also contributed to the brand fund, is under the agreement under no obligation to do so. The contributions of YRIPL are at its own discretion. Thus, looking at the facts obtaining in the present case, it is quite clear that the principle of mutuality would not be applicable to the instant case. This was the only stand taken by the appellant before the authorities below. In these circumstances, we are of the opinion that the impugned judgment of the Tribunal does not call for interference. The authorities below have returned pure findings of fact, which are not perverse to our minds. No substantial question of law arises for our consideration. Resultantly, the appeal is dismissed. 29. Coming to the additional evidences filed by the assessee to examine whether the change the facts in the present case or not, we 1st referred to the agreement dated 25th day of December, 1999 titled as license agreement which is between the icon restaurants India private limited and the franchisee. It is in fact a franchisee agreement is submitted by the assessee in the application for additional evidence admission. The benefit that accrues to the holding company is sta .....

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..... tion that is received by assessee is for the predefined purposes for incurring them on advertisement marketing and promotion activities. There is an obligation imposed under the facts and circumstances of the present case and the appellant is never in receipt of any income since the amounts that are received as the contribution are diverted at source by an overriding title in view of this enforced obligation. The assessee has relied upon the decision of the honourable Supreme Court in case of CIT vs Bijlii cotton Mills 116 ITR 60. We have carefully considered the above decision and find that the assessee collected in that particular case the drama charges compulsorily at the time of every sale made to its construction of which was credited to a separate account to be subsequently incurred by it on charitable activities. On that basis the honourable Supreme Court held that, as the assessee was not under a compulsory obligation to spend that amount received on charitable activities it cannot be regarded as income in its hands. On careful consideration of the above decision it is apparent that the assessee in that particular case was carrying on the business of manufacturing and selli .....

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..... s merely an attempt to separately form an advertisement marketing and publicity company for the products or the licenses of the holding company by receiving the compulsory contributions at agreed percentage from the franchisee. The contribution of the holding company is always indeterminate and without obligation. Therefore, as the contribution received by the assessee are treated by the assessee itself as a trading receipt, the ratio laid down by the honourable Supreme Court, due to the peculiar facts of the case before us does not apply. 31. The assessee has also relied upon the decision of the honourable Supreme Court in CIT vs Sitaldas Tirathdas [41 ITR 367] where the honourable Supreme Court held that the true test is whether the amount short to be deducted in truth never reached to the assessee as his income. However in the present case as we already stated the assessee himself recognizes it as its income. In that particular case the assessee was under a decree required to pay such sum is maintenance to his wife and children is substantial evidence. The honourable Supreme Court in that particular case held that there is a difference between an amount, which a person is oblige .....

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..... ated in that appeal was whether on the facts of that particular case marketing contribution of INR 4 80876/- made by the assessee is required to be treated as royalty under article 12 of the India Netherlands double taxation avoidance agreement and can be taxed as such. The coordinate bench held that that the receipt is not a consideration for use of any of the intellectual property of the assessee and further it cannot be taxed as royalty fees for technical services since the company does not have the permanent establishment in India there is no question of taxing it under the article 7 as business profits either. However the learned authorised representative stated that the marketing contribution is with respect to the percentage of gross room revenue and in the case of the assessee also the contribution is as a percentage of sales. However, the above argument of the learned authorised representative deserves to be rejected for the reason that here the issue is whether the income received by the assessee is diverted by overriding title or not. Such was not the issue before the coordinate bench in the decision cited. Hence, reliance placed on the above decision of the tribunal doe .....

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..... n their with and to provide development advisory services to the restaurant industry. 36. The assessee also submitted that the above object clause of the company was altered as per special resolution passed in the extraordinary general meeting dated 15/07/2003 and certificate of registration confirming the alteration dated 21/08/2003 issued by the registrar of companies. The altered object reads as under:- to carry out advertising, media and promotion for KFC, Pizza Hut and other brands currently owned or required in future by Yum! Restaurants (India) Private Ltd and/or its parent/associate companies, on a non-profit making principle, funded by marketing contributions received from the licensees of Yum! Restaurants (India) Private Ltd and/or other sources as the case may be. 37. On careful appreciation of the MOA of the assessee company , it is apparent that till 15/7/2003 it was a normal company carrying on business. With effect from the main object of MAO was changed. Thereafter The main object of the assessee is to carry out advertising, media and promotion for Kentucky filed kitchen, Pizza Hut and other brands owned or required by the holding company funded by the marketing con .....

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..... ine of diversion of income by overriding title mainly signifies that an income received by an assessee is actually belongs to somebody else with an obligation to divert the income in a particular manner before it accrues to assessee. On the contrary if income passes through the assessee to an ultimate purpose, the case is of application of income in a particular manner. Even though he may enter into a legal obligation, as in the present case by Operating agreement, to apply it in a certain way, still it remains the income of the assessee. What is necessary to be considered is the true nature of the transaction and whether in fact the transaction has resulted in profit or loss to the assessee. The True nature of transaction in the present case is of a marketing arrangement by the holding company by forming Assessee Company where the licensees of the holding company shall contribute to the assessee company for a certain business activity. More so the Holding company is not a contributor but gives a direction for spending the fund. Fund is received from the franchisee owners but it is used as per directions of holding company Further treatment of income merely in a particular manner m .....

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..... rating on a non-profit basis and is therefore not liable to tax and hence the order of assessment determining taxable income of ₹ 55,30,150/- is liable to be quashed. 1.2 That the learned CIT(A) has erred both on facts and in law in upholding addition of ₹ 50,55,375/- by holding th Accordingly is under at the receipts amounting to ₹ 8,97,62,468/- which represent advertising contribution/ received from the franchisees and the Appellant s holding company were not diverted at source by overriding title . 1.3 That the Learned CIT(A) has erred both on facts and in law in confirming that contributions by Yum! Restaurants India private Limited ( YRIPL ) to the Appellant were contradictory to the terms of the approval granted by the Secretariat of Industrial Assistance , Government of India and the tripartite Operating Agreement between the Appellant, YRIPL and the franchisees. 1.4 That the Learned CIT(A) has erred both on facts and in law in upholding that the Appellant has been used as a tool to evade tax on excess of income over expenditure ,and thereby making a disallowance of ₹ 50,55,375/- in the hands of the Appellant. 2. The Learned CIT (A) has erred both on .....

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..... for assessment year 2001 - 02 and 2002 - 03 holding that assessee is not a mutual concern and the income of the assessee is not tainted with mutuality and therefore chargeable to tax as a business income. Further similar reasons given therein we dismiss ground number 1.1 of the appeal of the assessee and upon the finding of the learned CIT - A. 48. Ground number 1.2 - 1.4 is of the appeal is with respect to the addition of INR 5 055375/- by holding that the receipt of INR 8 9762468/- which represent advertising contribution received from the franchisees and the appellant s holding company were not diverted at source by overriding title. To substantiate the above ground the assessee advance the similar argument is advanced for assessment year 2001 - 02 and 2002 - 03. The learned departmental representative also advanced the same argument is advanced by him in those appeals. 49. We have already decided the above issue in appeal of the assessee for assessment year 2002 - 03 wherein we have held that there is no infirmity in the order of the learned CIT - A in confirming the action of the learned assessing officer holding that that appellant company s income are not diverted at source .....

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..... consequently its income would not be exempt from tax. 3. That on the facts and in law, the Ld. CIT(A) has failed to appreciate that there being complete identity between the contributories and the beneficiaries, the 'principle of mutuality' was applicable and the receipts of the Appellant could not partake the character of taxable income. 4. That on the facts and in law, the Ld. CIT(A) 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. 4.1 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 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. 4.2 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 Agre .....

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..... ument of the assessee that every receipt is not an income and the income of the assessee is diverted by overriding title. Both the parties submitted that issue is identical to the ground of appeal of the assessee for assessment year 2002 - 03. We have already decided this ground in appeal of the assessee for assessment year 2002 - 03 holding that the income of the assessee is not diverted by overriding title but it is merely an application of the income of the assessee. For the similar reasons we dismiss ground number 5 - 7 of the appeal of the assessee, accordingly, we confirm the order of the lower authorities. 61. Ground number 8 of the assessee is with respect to the action of the learned CIT - A in following the decision of the coordinate bench in assessee s own case for assessment year 2001/02 despite change in the facts in the current year. Ground number 9 is with respect to the action of the learned CIT - A not appreciating the business model of the appellant and the terms and conditions of the tripartite agreement. We have already dealt with this issue in deciding the principal issues involved in the appeal of the assessee for assessment year 2002 - 03 wherein we have held .....

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..... r 2008-09:- 1. On the facts and in the circumstances of the case and in law the learned CIT(A) has erred in deleting an addition of ₹ 36151479/- made by AO on account of unverified S. Creditors. 67. Adverting to the ground of appeal the learned departmental representative vehemently supported the order of the learned assessing officer whereas the learned authorised representative relied upon the order of the learned CIT - A. 68. We have carefully considered the rival contentions and perused the orders of the lower authorities. The learned CIT noted that the assessee could not furnish the confirmation from the above parties amounting to INR 3 6151479/- at the assessment stage however the assessee has submitted party wise details along with the permanent account number and the nature of transactions. At the appellant state the appellant furnished additional evidences mentioning the details of payment of such and the creditors in subsequent years and certificate from the bank confirm clearances of such act. In the remand report the AO stated that the all confirmation for not filed stating that some of the confirmation or find that the remand state but not all and the appellant c .....

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..... nefit from the AMP activities rendered by the Appellant, which finding is contrary to the facts on record. 5.1 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 royalty income of YRIPL and income of Pepsi Foods bore a direct nexus to the AMP activities carried on by the Appellant, and as such the benefit to YRIPL and Pepsi Foods was clearly established. 5.2 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. 5.3 That the Ld. CIT(A) erred in alleging that the additional contribution by YRIPL which was discretionary led to the assumption that the appellant was not functioning as a mutual concern. 6. That the Ld. CIT(A) erred in law and on facts whilst observing that the appellant was working as an advertising contractor and was allegedly rendering services for which it was receiving money with a profit element i .....

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..... as erred in upholding the interest levied by the AO under Section 234B of the Act. 70. Ground number 1 and 2 of the appeal are general in nature. No arguments were advanced by either of the parties. Therefore, same are dismissed. 71. Ground number 3 - 7 relates to the argument of the assessee with respect to the applicability of the principle of mutuality to the income of the assessee. Both the parties agreed that this is identical to the ground of appeal in the appeal of the assessee for assessment year 2001 - 02 and 2002 - 03. They also submitted that their arguments are also same and there is no change in the facts of the case. We have already decided the above ground against the assessee holding that income of the assessee is not covered by the principle of mutuality, accordingly we confirm the order of the lower authorities and dismiss the above grounds. 72. The ground number 8 - 10 of the appeal of the assessee is with respect to the claim of the assessee that income of the assessee is diverted by in overriding title. Both the parties agreed that this issue is identical to the issue is decided in appeal of the assessee for assessment year 2001 - 02 and 2002 - 03. They also su .....

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..... n holding that the Appellant cannot be classified as a mutual concern and consequently its income would not be exempt from tax. 4. That on the facts and in law, the Ld. CIT (A) has failed to appreciate that there being complete identity between the contributories and the beneficiaries, the 'principle of mutuality' was applicable and the receipts of the Appellant could not partake the character of income. 5. That on the facts and in law, the Ld. CIT(A) 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. 5.1 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 royalty income of YRIPL and income of Pepsi Foods bore a direct nexus to the AMP activities carried on such the benefit to YRIPL and Pepsi Foods was clearly established. 5.2 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 prod .....

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..... he Appellant and the terms and conditions of the tripartite agreement. 15. That the Ld. CIT(A) has erred in not adjudicating on the ground in relation to disallowance of ₹ 13,97,806 on account of doubtful debts. 16. 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. 77. Ground number 1-2 of the appeal are general in nature and therefore same is dismissed. 78. Ground number 3 - 7 are with respect to the identical issue involved in the appeal of the assessee for assessment year 2001 - 02 and 2002 - 03 contesting that the income of the assessee is tainted with mutuality and therefore not chargeable to tax. Both the parties agreed that there is no change in the facts and circumstances of the case in their arguments are also remained the similar. We already decided the above issue in the case of the assessee for assessment year 2001 - 02 and 2002 - 03 holding that the income of the assessee is not tainted with the mutuality and is chargeable to tax. Accordingly we confirm the order of the lower authorities and dismiss ground number 3 - 7 of the appeal. 79. Ground number 8 - .....

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..... s Ltd. do not benefit from the AMP activities rendered by the Appellant, which finding is contrary to the facts on record. 4.1 That on the facts and in law, the Ld. CIT(A) has grossly erred in not recognising that in the nexus to the AMP activities carried on by the was clearly established. 4.2 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. Every receipt is not income 5. That, without prejudice, on the facts and in law, the Ld. CIT(A) erred in not appreciating that every receipt in the hands of an assessee does not partake the character of income. Diversion of Income by Overriding Title 6. 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. 7. Without prejudice to the above, on the facts and in law, the Ld. CIT(A) failed to appreciate that even assuming that the said AMP contribution partakes the character of income, .....

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..... eal of the assessee. 87. On the issue of the disallowance of the provision for doubtful debts amounting to ₹ 494434 challenge by ground number 10 of the appeal no arguments were advanced and therefore same is dismissed. 88. The ground number 11 of the appeal is against charging of interest u/s 234B of the income tax act, which is consequential in nature, and are no arguments advanced by the assessee and therefore same is dismissed. 89. Accordingly ITA number 4079/del/2015 for assessment year 2010 - 11 filed by the assessee is dismissed. ITA No. 2561/Del/2015 Assessment Year 2013-14: 90. The assessee has raised the following grounds of appeal in ITA No. 2561/Del/2015 for the Assessment Year 2013-14:- General Ground 1. That on the facts and in law, the impugned order passed by the Ld. Commissioner of Income Tax (Appeals) -09 ( Ld. CIT(A) ) confirming the order of the Assessing Officer ( AO ) and assessing the total income of the Appellant at ₹ 11,74,97,849 as against NIL returned income, is bad in law. Principle of Mutuality 2. That on the facts and in law, the Ld. CIT(A) has grossly erred in holding that the Appellant cannot be classified as a mutual concern and conseque .....

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..... ate upon ground/issue relating to diversion of income by overriding title. 12. Without prejudice to the above, on the facts and in law, 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 eligible to tax. Other Grounds 13. 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. 14. 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. 91. Before us assessee has submitted a written note that ground number 1 to ground number 15 of the appeal is identical to issues raised in the appeal of assessment year 2001 - 02 in 2002 - 03 of the appeal of the assessee. The learned CIT DR also agreed that there is no change in the facts and circumstances of the case compared to those years in this year. Both t .....

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