TMI Blog2019 (9) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... nchisee 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 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 According to clause 10 of the 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 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 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 [ 2009 (4) TMI 1 - DELHI HIGH COURT] . Accordingly ground number 2 of the appeal for assessment year 2002 03 is dismissed. Receipts which represent advertising contribution received from the franchisees and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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. - ITA No. 3235/Del/2005, 2896/Del/2007, 938/Del/2007, 4078/Del/2015, 5894/Del/2015, 5895/Del/2015, 4079/Del/2015, 2561/Del/2018 And ITA No. 5735/Del/2015 - - - Dated:- 9-9-2019 - SHRI BEENA A PILLAI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Assessee : Shri Salil Kapoor, Adv And Ms. Soumya Singh, Adv For The Revenue : Shri J. K. Mishra, CIT DR And Smt Naina Soin Kapil, SR. DR ORDER PER BENCH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 05.10.1998, SIA granted approval to YRIPL to set up a step-down wholly owned subsidiary on the basis of a broad framework indicated by YRIPL. The broad framework being that the proposed new subsidiary company would be a non-profit enterprise, which would be governed by the principles of mutuality. The wholly owned subsidiary, as indicated by YRIPL, was being set up to carry out and economies the cost of advertising and promotion by catering to the specific needs of its franchisees in order to enable them to concentrate on restaurant operations and management. The approval was granted on the condition th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 unspent amount TRIM will spend the amount on regional and/or national advertising, promotions or research expenditure conducted by TRIM in its discretion....... 4.1 Tricon may at the request of TRIM, but subject to Tricon's sole and absolute discretion pay to TRIM any such amount(s) as it may deem appropriate to support the AMP activities during any accounting period. For the avoidance of doubt, it is clarified and agreed between the parties that Tricon shall have no o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Officer examined the case laws and the details submitted by the assessee-company. The Assessing Officer after examining the contents of the SIA approval granted vide letter dated 05.10.1998 and the contents of the tripartite agreement returned the following finding of facts: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions 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 fixed percentage) of their respective revenue. However, as per clause 4.1 of Tripartite operating agreement as reproduced in pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 mutual concern is the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at source by overriding title for being spent on advertisement, and 5. Relying upon the 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 contributi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 at source 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 befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the assessee. It was submitted 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied 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 assessee was buying huge benefit to Pepsi. He extensively referred 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure 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 31.01.2008 passed by the. The said MA was filed on the ground that ground of appeal no. 1(b) of the assesse regarding divers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. 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 ₹ 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 ₹ 44,44,002/- by - 1, not accepting that assessee is a mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia Manufacturers Organization Ors. in Appeal (civil) 3492-3494 of 2005 as under The spirit behind Explanation IV is brought out in the pithy words of Wigram, V.C. in Henderson v. Henderson 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. Further, Constitution Bench of Hon'ble Supreme Court in Direct Recruit Class II Engg. Officers' Assn. v. State of Maharashtra [1990] 2 SCC 715 laid down the following principle: - an adjudication is conclusive and final not only as to the actual matter determined but as to M.Nagabhushana v. State Of Karnataka Orson 2 February, 2011 Indian Kanoon - http://indiankanoon.org/doc/432335/ 7 every other 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 j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... troverted and decided. The object of Explanation IV is to compel the plaintiff or the defendant to take all the grounds of attack or defense in one and the same suit. fVide Horn v. Jahan Ara, [1973] 2 SCC 189 192 : AIR (1973) SC 1406 (1409); Jaswant Singh v. Custodian of Evacuee Property, [1985] 3 SCC 648: AIR (1985) SC 1096 : (1985) Supp 1 SCR 331; Forward Construction Co. v. Prabhat Mandal, (1986) 1 SCC 100 : AIR (1986) SC 391 : [1985] Supp 3 SCR 766; Direct Recruits Class II Engineering Officers' Association v. State of Maharashtra. [1990] 2 SCC 715: AIR (1990) SC 1607 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 . 19. Further, in the case of CIT v T P Kumaran [1996] 88 Taxman 206 (SC), the Hon ble Supreme Court held as under 3. This appeal by special leave arises against an order of the Central Administrative Tribunal, Ernakulam made on 16-8- 1994 in OA No. 2026 of 1993. The admitted position is that while the respondent was working as the ITO, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-agitation may or may not be barred as res judicata. However, if the same issue is sought to be re-agitated, it also amounts to an abuse of the process of court. A proceeding being filed for a collateral purpose, or a spurious claim being made in litigation may also in a given set of facts amount to an abuse of the process of the court. Frivolous or vexatious proceedings may also amount to an abuse of the process of court especially where the proceedings are absolutely groundless. The court then has the power to stop such proceedings summarily and prevent the time of the public and the court from being wasted. Undoubtedly, it is a matter of courts' discretion whether such proceedings should be stopped or not; and this discretion has to be exercised with circumspection. It is a jurisdiction, which should be sparingly exercised, and exercised only 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was no specific finding in the order of the High Court in respect of its pleading with regard to diversion of income by overriding title, it is pertinent to refer to Explanation V to Section 11 of Code of Civil Procedure,1908 which provides as under- Any relief claimed in the plaint, which is not expressly granted by the decree, shall, for the purposes of this section be deemed to have been refused. Considering the above-mentioned provision, it is deemed that the Hon ble High Court refused any relief to the assesse in respect of its pleading with regard to diversion of income by overriding title. Doctrine of merger 22. Apart from the fact that this appeal is covered under the rule of constructive res judicata, the impugned matter is covered under doctrine of merger also. 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 Jurisdictional Hon ble Delhi High Court in the case of Principal CIT v N R Portfolio (P) Ltd. [2019] 103 taxmann.com 17 ( Delhi). In respect of doctrine of merger, reference is made to para 21 of the order which is extracted as under 21. What is discernible from the above discussion is 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. Undoubtedly, there are cases and causes where issues that were not the subject matter of appeals were sought to be made the content of a later litigation before the lower court or tribunal. As emphasized in Amritlal Bhogilal and Gojer Bros, (supra) as to what was that issue or matter may at times be decisive to consider whether the previous binding order of the appellate or revlsional authority prevailed ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt 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 difference in the structure of the power of rectification conferred upon tax authorities, such as the AO and the CIT on the one hand, and the ITAT, on the other. The AO- as well as lower revenue authorities have an overriding power to rectify, in Section 154 (1 A) which reads as follows: ( 1 A) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in subsection (1), the authority passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided. 27. However, such overriding power is absent, in the case of the ITAT, whose authority to amend or rectify its order is confined by the language (of Section 254 (2)), i.e. to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity 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 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 affirmation 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. 29. In the landmark decision in the case of Kunhayammed Ors vs State Of Kerala Anr (2000) 6 SCC 359, it has been held by the Hon ble Supreme Court as under 1. The doctrine of merger is neither a doctrine of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rai 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 case and the scope of the statutory provisions conferring the appellate or revisional jurisdiction. 3. In Gojer Bros. (P.) Ltd. v. Ratanlal Singh AIR 1974 SC 1380, this Court made it clear that so far as merger is concerned, on principle there is no distinction between an order of reversal or modification or an order of confirmation passed by the appellate authority. In all the three cases, the order passed by the lower authority shall merge in the order passed by the appellate authority whatsoever be its decision - whether of reversal or modification or only confirmation. Their Lordships ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch 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 (18 July 2011) in IA No. 36 44 in WP ( C ) No. 967 of 1989 . In the said decision, Hon ble Justice Dalveer Bhandari and Justice H.L. Dattu, have examined the concept of finality of judgment and how the adversarial system in India is being abused by litigants, and its adverse impact of the administration of justice. The relevant extracts from the judgment are reproduced as under:- 114. The maxim inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts 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 of the assessee, after the assessee had received the income as his own. The case is one of application of a portion of the income to discharge an obligation and not a case in which by an overriding charge the assessee became only a collector of another's income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liged 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 as under In our opinion, the true test is whether the amount sought to be deducted, in truth, never reached the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce 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 Diageo India takes the entire remaining balance as per clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whom it receives money and against the said receipts, expenses are made. All the receipts 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 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 31st of January 2008, the miscellaneous application was filed before the coordinate bench on 24/6/2008, the appeal was filed before the honourable High Court on 30/6/2008, the honourable High Court announced its order 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that income has been accrued to the assessee, which has been shown in the profit and loss account, and therefore now there is no reason to state that did not accrue to the assessee at all. 48. He further submitted that the assessee contends that the income is tainted with mutuality, assessee also submitted 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account the excess is carried forward as a current liability. He stated that this itself proves that the above sum does not belong to the assessee. f. He submitted that assessee has filed an application for additional evidence from assessment year 2002 03, 2003 04 but not for assessment year 2001 02. He further referred that 1 of the reason why the honourable High Court did not accept the argument of the assessee that the 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 mispl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pizza Hut and other brands currently owned or acquired in future by the holding company and its parent or its associated companies. According to the terms of the franchisee agreement the franchisee have agreed to participate in the cooperative advertising Brand funds to be established by the assessee for utilization of the advertising contribution payable by the franchisee in India under the respective agreements with the holding company. The assessee has in turn also entered into trademark license 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 enga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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. Further 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iginal 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/2008, which was allowed by order dated 31st of March 2010 recalling the original order of coordinate bench passed on 31/1/2008. Prior to this honourable High Court, against the order of the coordinate bench dated 31/01/2008 in appeal preferred by the assessee, in ITA number 1433/2008 as per order dated 1/4/2009 has upheld the order of the coordinate bench. Thus, it is apparent that coordinate bench subsequent 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 ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 situation, if the argument of the learned authorised representative is accepted, it will override or nullify the decision of the honourable High Court, which we are sure, are not vested with such power. The judicial propriety also demands that when a particular issue has been decided by the higher forum then, the lower forum should always refrain from deciding any aspect of that matter which can disturb the finding 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment 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 ₹ 3,408,129/- 2. The learned Commissioner of Income-tax (Appeals) has erred both on facts and in law in not appreciating 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 and therefore the surplus over expenditure is not liable to tax. 3. The learned Commissioner of Income-tax (Appeals) has erred both on 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 coordinate bench. For assessment year 2001 02 the coordinate bench rejected the appellant s plea of mutual concern but for an altogether different reason. The reasons stated by the coordinate bench was that as the two contributories namely holding company and Pepsi foods Ltd were not beneficiary and there was lack of absolute identity between contributories and the beneficiaries. The learned authorised representative stated in the application that observation of the coordinate bench were not borne out of any records nor was this e basis of rejection of the appellant s plea by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 advertisement and marketing activities of the assessee. Thus he submitted that the holding company as well as the Pepsi foods Ltd was direct beneficiary of its activities, but in a different manner owing to the different business functions as compared to the franchisees. He further submitted that what is essential for the doctrines of which are key to apply is absolute identity between the contributors and the beneficiaries. It is not at all essential that each contributory should be a beneficiary in the same manner or even the same extent as the other contributors. He ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 on the principle that no man can do business with himself, the excess of income over expenditure is not amenable to tax. However, in the present case the authorities below have returned a finding of fact that the fund as contributors such as Pepsi Food Ltd which do not benefit from the APM Activities. Moreover, the principle of mutuality is applicable to those entities whose activities are not tinged with commercial purpose. As a matter of fact in the instant case the parent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 there is an overriding obligation on the assessee to spend contribution for advertisement marketing and promotion activities, the contributions are diverted at source by overriding title and therefore there is no question of application or non application of an amount which is not in the nature of income in the hands of the appellant. There is no dispute on the contention raised by the assessee that every receipt is not an income. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ize 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 schedule eight it is mentioned that franchisees where under the franchisee will pay a certain percentage of the revenue is advertising contribution to the company. Further the holding company may its sole discretion paid to the company such amount, as it may deem appropriate to support the activities of the company. Therefore the assessee has treated the above sum as a trading receipt and is also tainted with commerci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 franchisee but at the discretion of the holding company. The advertisement marketing promotion spend is also under the direction of the holding company. Therefore the facts of the case before us are distinguishable. 33. The learned authorised representative also placed heavy reliance on the decision of the coordinate bench in ITA number 4341/MUM/2002 for assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 liability of the members. The main object of the assessee company was as under:- to carry on the business as buyers, sellers, traders, importers, exporters, distributors, agents, brokers, factors, stockiest, domestic traders, international traders, dealers and consultants of all types of merchandise, materials, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umber 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 not obliged to contribute on regular basis or as a fixed percentage of its turnover. Further the approval also laid down the condition that separate funds may be maintained for KFC and Pizza Hut brands. No such se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riterion 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 2003-04 43. The assessee has raised the following grounds of appeal in ITA No. 938/Del/2007 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 4,07,34 - under section 234B of the Act, even though the Appellant has clamed 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 ₹ 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 mutu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income tax act. No specific arguments were advanced by the parties and no instances were shown to us which were related the principles of natural justice during the course of assessment proceedings and appellate proceedings before the lower authorities. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onditions 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 that the assessee is not a mutual concern and the income of the assessee is not diverted by the overriding title. These grounds of supporting the grounds of appeal of the assessee for this year on the above issue. As we already decided the ground number 2 7 on the above issue is, ground number 8 and 9 accordingly are dismissed. 62. Ground number 10 is with respect to the disallowance of the provision for doubtful debts amounting to ₹ 258288/ . No arguments were advanced on this issue before us and therefore same is dismissed. 63. Ground number 11 is with respect to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 could not produce the parties that the remand stage. Further in some of the confirmation filed there is some difference in the closing balances. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so 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 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 every receipt in the hands of an appellant does not partake the character of income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 submitted that their arguments are also similar. We have already held in appeal of the assessee for assessment year 2002 03 that income of the assessee is not diverted by overriding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. CIT(A) has grossly erred in 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee coining 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 assessee from the Ministry of Industry, Department of Industrial Policy and Promotion. 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. 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity 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 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 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 excl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t two assessment years holding that income of the assessee is not covered by the principles of mutuality and are chargeable to tax. Accordingly we confirm the order of the lower authorities and dismiss ground number 2 4 of the appeal. 86. Ground number 5 9 of the appeal is with respect to the argument of the assessee that income of the assessee is diverted by overriding title and therefore is not chargeable to tax in the hands of the appellant. Both the parties submitted that facts and circumstances in the arguments of them on this issue are identical is advanced by them for assessment year 2001 02 in 2002 03. He already decided above issue in the appeal of the assessee for assessment year 2001 02 in 2002 03 holding that there is no diversion of the income of the assessee by overriding title and therefore confirmed the orders of the lower authorities. Accordingly we confirm the orders of the lower authorities for this year too and dismiss ground number 5 9 of the appeal 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 8. That on the facts and in law, the Ld. CIT(A) has grossly erred in concluding that the appellant has violated the terms and conditions on which the approval was obtained from Secretariat of Industrial Assistance ( SIA ), Ministry of Finance, Government of India, as the appellant has inducted business associates like Pepsi. 9. That on the facts and in law, the Ld. CIT(A) has grossly erred in concluding that the receipts in the hands of the appellant are in the character of income as the same were made to the appellant after deduction of tax at source. Every receipt is not income 10. That, without prejudice, on the facts and in law, the Ld. CIT(A) has erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rguments 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. However, if there is any carry forward loss is allowable to the assessee, the learned assessing officer is duty-bound to grant credit of the same. Therefore we direct the learned assessing officer to give if any carry forward loss is allowable to the assessee in accordance with the law. However we do not adjudicate the contention raised by the learned authorised representative in written submission filed before us, as there was no ground raised in the appeal memo for this year. The ground number 17 mentioned by the learned authorised re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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