TaxTMI 
TaxTMI 
2019 (9) TMI 551
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....ue the coordinate bench, vide para number 11 has held that in absence of the applicability of the principle of mutuality the surplus cannot be held to be exempt on the principles of mutuality. It was further stated in the same paragraph that no other arguments were advanced to justify the applicability of the principle of mutuality. Consequently, the appeal of the assessee was dismissed. Against the order of the coordinate bench, Assessee preferred appeal before the honourable Delhi High Court. Hon. High Court was pleased to notice the issue in the appeal as per paragraph number 2 holding that the only issue, which arose in this case, is with respect to the taxability Vis a Vis Mutuality of Rs. 4444002/- being excess amount of income or expenditure. The honourable High Court dismissed the appeal of the assessee holding that the principle of mutuality would not be applicable to the instant case. Accordingly the order was passed by the honourable High Court on 1/4/2009 holding as under :- "2. The only issue which arose in this case is with respect to the taxability of Rs. 44,44,002/- being excess amount of income over expenditure. The said surplus had arisen on account of ad....
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....eting activities of each of the brands of which YRIPL was a licensee for the mutual benefit of the franchisees. The entire activity of the assesseecompany was to be carried out on no-profit basis and that the assessee-company was obliged not to repatriate any dividends. The broad purpose of the agreement is best encapsulated in the following clauses:- "2.2 TRIM will establish and operate Brand Funds in respect of each brand for the purpose of allocating and using the advertising contribution received from franchisee and other franchisee of Tricon operating Restaurants under the Brands. TRIM will allocate the advertising contribution received from the franchisees including franchisee for each restaurant to the respective Brand Funds established for that brand. It is agreed between the parties that the advertising contribution paid into a brand fund will be used for the AMP activities relating to that brand. 3.1 As and from the Effective Date, franchisee will pay the advertising contribution of 5% of Revenue for a particular month into the bank account of the brand fund established by TRIM by the 10th day of the following month. Details of the bank account of each b....
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.... accounting period and be met out of the advertising contribution paid by the franchisees including franchisee for that accounting period. For the avoidance of doubt, it is agreed between the parties that Tricon and/or TRIM shall not be obliged to fund the deficit. 8.5 It is clearly understood and agreed between the parties that the only objective of TRIM is to coordinate the marketing activities of the brands including the mutual benefit of the franchisees including the franchisee. It is envisaged that no profits will be earned and no dividends will be declared by TRIM." 3.3 It is in this background that on 31.10.2001 the assessee-company filed its return for assessment year 2001-02. On 27.08.2002, the assessee's return was processed under Section 143(1) of the Act. On 24.10.2002, the assessee's case was picked up for scrutiny and a notice under Section 143(2) of the Act was issued to the assessee-company. During the course of scrutiny, queries were raised with the representatives of the assessee-company; whereupon it was revealed that the assessee-company had an excess income over expenditure amounting to Rs. 44,44,002/-. However, the gross total income had ....
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....account. However, it was seen brand funds was established by assessee-company. In fact, YRIPL continued to receive the advertising contribution from the franchisee as was being done by it prior to setting up of assessee-company. This findings shows that assesseecompany has been used as a tool to evade tax on excess of income over expenditure incurred in during the previous year. A chart giving complete details of contributions receivable by assessee-company and amounts actually received by assessee-company and YRIPL is being enclosed as Annexure 'A'. This annexure shows that most of the contribution has been received by YRIPL that is against terms of SIA approval and even the clauses of Tripartite operating agreement. VI.5 Single Ledger Account- assessee-company and YRIPL - considered as one entity- Information under Section 133(6) was called from all the franchisees. The information received from such franchisees is analyzed in the ensuing paras below. In their books of account, the franchisees have one ledger account for royalties marketing advertising payable to YRIPL/assessee-company. For them it is single entity. They have not maintained any separate ....
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....and promotional activities (hereinafter referred to as the "APM activities') being a critical component of running a successful business venture, it is intrinsically linked to profit on sales of franchisees, that is, the contributors. It could not be said that the contributors activity was immune from the taint of 'commerciality' and that unlike a club the assessee-company was not set up for social intercourse nor was a set up for cultural activity where the idea of profit or trade does not exist. What was essential was that there should not be any dealing with the outside body, which results in benefit, which promotes some commercial/business venture. He further held that though the form taken up to conduct its activity resembles a mutual concern, it could not however be denied that the contributions were made undoubtedly for business considerations. The CIT(A) being of the view that the underlying purpose was solely for commercial consideration and excess of income over expenditure should be brought to tax. 7. Being aggrieved, the assessee-company preferred an appeal to the Tribunal. The Tribunal by the impugned judgment dismissed the appeal of the assessee-company after....
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....n 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." [Underline supplied by us ] 3. Subsequently before Honourable Supreme Court assessee preferred petitions for special leave to appeal in (civil) numbers 20571/2009 arising out of the judgment dated 1/4/2009 in ITA number 1433/2008 of the honourable Delhi High Court. As per order dated 26/3/2010, the honourable Supreme Court granted the leave to the assessee. 4. Meanwhile, assessee preferred a Miscellaneous Application vide M A No. 295/Del/2008 before the coordinate bench stating that ground number 1 (b) raised in the appeal memo, though noted by the tribunal in its order in para number 3, has remained to be disposed of. The coordinate bench vide order dated 31/03/2010 vide para number 8 , has not been decided, therefore there is a 'mistake apparent from record'. The said ground was as under:- (b) in failing to consider and appreciate that the amount....
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....of an assessee to be liable to tax. Thus, what is essential is that an assessee should be in receipt of an 'income'. It is a well-settled principle of law that not every 'receipt' is income. In this regard reliance is interalia placed on the principles emerging out of the following judgments by the appellant:  Siddheshwar Sahakari Sakhar Karkhana Ltd vs. CIT (SC) (270 ITR 1) * CIT vs. Netar Krishna Sahgals Pr. Ltd (Delhi) (141 ITR 681) * Mehboob Productions Pvt. Ltd vs. CIT (Bombay) (106 ITR 758) * CIT vs Late Rajesh Pilot (Delhi) (219 CTR 403) b. The amounts received by the appellant from YRIPL, its franchisee's and other concerns, is for the predefined purpose of incurring them on AMP activities. In view of the obligation that has been imposed under the facts and circumstances of the present case, the appellant is never in receipt of any 'income' since the amounts that are received as AMP contributions are diverted at source by an overriding title in view of this enforced obligation. c. Thus the surplus that remains, if any, at the end of the accounting period is not exigible to tax. This is even more so in view of the....
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....vertising, promotion, publicity etc. Such receipts were sought to be taxed as royalty income of the assessee by the assessing officer. The Hon'ble Tribunal while rejecting the contention of the tax department held that, such contributions were received by the assessee with a corresponding obligation to use it for the agreed purposes (i.e. for marketing activities) and it was not an unfettered receipt in the hands of the assessee. The Hon'ble Tribunal further held that it was a kind of trust money, received in fiduciary capacity by the assessee and hence it cannot be viewed as "income" of the assessee. Also, it was held that the contribution having been made by the participating hotels/ franchisee's mandatorily does not affect the determination of the character of receipts. f. Your honors would appreciate that the facts and circumstances of the appellant's case are identical to that of the issue involved in the case of Bass International Holdings N.V. (supra). Therefore, keeping in mind the principles emerging out of the above mentioned judgments of the Hon'ble Apex Court and Mumbai Tribunal, as the amounts received by the appellant are within an overriding obligation o....
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....per the statement filed before us it is seen that the assessee sugar factory is utilizing the ADF on different projects as per the approval given in the annual general meeting (AGM). The assessee has to submit the report every year in respect of the collection and utilization of the amount under the ADF to the Government. Nowhere, it is the case of the Revenue that any money is diverted by the assessee sugar factory for any other purpose other than approved in the AGM of the members. Merely because the amount collected is not kept separately in the bank account, the character of the amount will not change as held in the case of Bijli Cotton Mills (P.) Ltd. (supra). As submitted before us the assessee is required to submit the Auditor's Report to the Director of Sugar, Govt, of Maharashtra each year showing the opening balance of the ADF, amount collected during the year and utilized during the year (Page No. 29 of the Compilation). We, therefore, hold that the collection made by the assessee towards the ADF by way of deduction made from the sugarcane bills payable to the members and non-members is impressed with an obligation to spend the same for the specified purposes and the....
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....The appellant had no intention to earn any profit (refer to the proposal submitted to SIA by YRIPL, and the appellants amended main objects clause) [b] The appellant can make no profits (refer the restrictions placed by the SIA in its approval and the tripartite operating agreement) [c] The appellant has made no profits (refer its financial statements collectively for all years including the years in which excess expenditure is there). Thus, there is no intent to earn any profit nor has any profit been earned in view of the actual functioning of the appellant and the activities carried out by it. In v Yum! Restaurants Marketing Pvt. Ltd, k. iew of the foregoing discussions and judicial precedents being relied upon by the appellant it is amply clear that the amounts received by the appellant are not in the nature of income as it is under an overriding obligation to expend the same on AMP activities. The appellant has no vested right in the amounts that it receives and is under a strict mandate either to expend the same or return the surplus if any. Therefore it has no rights over the funds and is a mere conduit to expend the amounts received in a collectiv....
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....er dated 31.03.2005 holding that the surplus of income over expenditure was taxable as business income of the assesse. It was held that the assesse is not a mutual concern. As regards claim that the advertising contributions were diverted at source by overriding title, it was held by the Ld. CIT(A) that the said ground was related to claim of mutuality and no separate adjudication was required. 5. The Hon'ble ITAT dismissed the appeal of the assessee vide order dated 31.03.2008. It was held that principle of mutuality is not applicable in the case of the assesse and the surplus of income over expenditure cannot be held to be exempt income. 6. Against the order of the Hon'ble ITAT, the assesse preferred an appeal before the Hon'ble Delhi High Court. The Hon'ble Delhi High Court considered the facts of the case in detail and upheld the decision of Hon'ble ITAT vide its order dated 1.04.2009 holding that the assesse doesn't fulfill the conditions and requirements of a mutual concern. It was held that the assessee company had not only received the contributions from various franchises but also from "P" Ltd and YRIPL who were neither franchisees nor beneficiaries and t....
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.... a suit, the parties must include all facts pertaining to the suit and must claim all the reliefs that he is entitled to. Failure to do so would bar such a party from raising those pleas again. In this context, it may please be noted 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 said matter in issue has already been decided by the Hon'ble Delhi High Court in this case. 10. It may be appreciated that matter in issue in this case is whether surplus of income over expenditure in respect of advertising contributions / receipt is taxable or not. The assessee raised the following ground of appeal before the ITAT 1. The Learned CIT(A) has erred both on facts and in law a. in not accepting that the appellant Is a "mutual concern" and is solely operating for the benefit of a group of persons who contribute funds which are to be spent on advertisement and publicity for their benefit, b. in failing to consider and appreciate that the amount received by the appellant from the franchisees towards advertising contributions are diverted at source by overridi....
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....ken by a party in a proceeding between him and his opponent, he should not be permitted to take that plea against the same party in a subsequent proceeding with reference of the same subject matter. 13. The concept of res judicata has been succinctly explained by the Hon'ble Supreme Court in the case of State Of Karnataka & Anr vs All India 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 actua....
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....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. " 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 int....
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....ame thing as if the matter had been actually controverted 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 Expla....
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....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 p. a. The Administrative Tribunal in the impugned order directed the payment of interest. T....
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....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 to put his case in one way, he cannot thereafter bring the same transaction before the court, put his case in another way and say that he is relying on a ne....
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....l 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. The assessee took up the matter before the Hon'ble Delhi High Court. The Hon'ble Delhi High Court considered the facts of the case in detail and passed the order holding that the judgment of the ITAT deserves to be sustained. 23. Further, after 4 months of the order passed b....
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.... 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 over the lower court or authority's order. " 26. Further, reference is made to following portion of the order which is extracted as under:- 24. This court is of the opinion that in the present case, the issue sought to be urged by the assessee in the first ITAT order was in its cross objection, concerning the legality of reassessment. Undoubtedly,....
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....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 with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer..." 28. Furthermore, this court is of the opinion that the conduct of the assessee was speculative, to put it mildly. As observed earlier, it is not an uninformed litigant; it calculatedly chose not to question the reject....
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.... 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 constitutional law nor a doctrine statutorily recognized. It is a common law doctrine founded on principles of propriety in the hierarchy of justice delivery system. On more occasions than one, this Court had an opportunity of dealing with the doctrine of merger. It would be advisable to trace and set out the judicial opinion of this Court as it has progressed through the times. 2. In CIT v. Amritlal Bhogilal & Co. AIR 1958 SC 868 this Court held : "10. There can be no doubt that, if an appeal is provided against an order passed by a Tribuna....
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.... 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 referred to an earlier decision of this Court in U.J.S. Chopra v. State of Bombay AIR1955 SC 633 wherein it was held : "A judgment pronounced by a High Court in exercise of its appellate or revisional jurisdiction after issue of a notice and a full hearing in the presence of both the parties would replace the judgment of the lower court, thus, constituting the judgment of the High Court the only final judgment to be executed in accordance with law by the Courts below." 4. In S. S. Rathore i/. State of Madhya Pradesh AIR1990 SC 10 a larger Bench of this Court (Seven-Judges) having reviewed the av....
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....ion 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 interest Republicae ut sit finis litium' says that it is for the public good that there be an end of litigation after a long hierarchy of appeals. At some stage, it is necessary to put a quietus. It is rare that in an adversarial system, despite the judges of the highest court doing their best, one or more parties may remain unsatisfied with the most correct decision. Opening door for a further appeal could be opening a floodgate, which will cause more wrongs in the society at large at the cost of rights. 116. In Manganese Ore (India) Ltd. v. The Regional Assistant Commissioner of Sales Tax, Jabalpur(1976) 4 SCC 124 this court held that the doctrine of stare decisis is a very valuable principle of precedent which cannot be departed ....
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....hildren 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. " 33. Even if for the sake of argument, without accepting the contention of the assesse , it is considered that the assesse was obliged to expend its receipts towards advertisement and marketing expenses only, then also its income cannot be excluded from taxability . As elucidated by the Hon'ble Apex Court in the case of Sitaldas Tirathdas (supra) that obligations, no doubt, there are in every case, but it is the nature of the obligation, which is the decisive fact. It has been further held that Whereby 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. In the instant case, at the most assesse has applied its income receive....
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....ent 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 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 by the nature of the obligation cannot be said to be a part of the manufacture and sale of liquor Is closely controlled and regulated by the State Government Including its storage, bottling, wastage, retail and wholesale sales thereof. The exclusive purchaser in the instant case was a State Corporation, namely, KSBCL and therefore, such end to end control of the State Government under whose licence, the respondent assessee alone was to manufacture and sell the liquor, it cannot be said by any stretch of imagination that such a business was being done exclusively for and on behalf of the third party, viz. Diageo India, who was not at all subject to any control under the Exc....
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....#39; between the two parties, is their discretion and if the assessee gets its share of total profits only to the extent of Rs. 45 per case in the name of bottling charges and Diageo India takes the entire remaining balance as per clauses 16 and 17 of the Agreement dated 30-10-2007, that distribution of surplus between the two parties to the contract has no effect and overriding impact on the taxability part of the entire income arising or accruing firstly, in the hands of the respondent assessee for the period in question.[Para 27] 38. Further, in the aforesaid decision of Chamunda Winery & Distillery, it has been held by the Hon'ble Karnataka High Court that "73. We further hold clearly and firmly that Book entries and Method of Accounting is not determinative and conclusive for deciding the computation of 'taxable income' in the hands of the Assessee though they may be relevant to be considered. 74. This is where we feel the tax avoidance effort has been made by the parties and we cannot uphold the same in the overall analysis of the facts and legal position applicable to the facts of the present case. 75. What we further feel Is that ....
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....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 question reached the member of the congregation or was diverted to the congregation, without reaching the member, by way of overriding title. " In the instant case, amounts are received from the clients for AMP activities and the said amounts are duly credited to P&L Account of the assesse. The amount is not diverted to any other person who can have claim over the amounts received by the assessee company. 41. Considering the above facts and case laws, there is no applicability of doctrine of diversion of income by overriding title in this case. This plea of diversion of income by overriding title was admittedly raised by the assesse before the High Court. Once the order is passed by the High Court in a matter, the said pleading cannot be entertained afresh by the Hon'ble Tribunal. Moreover, the plea of the assessee with regard to diversion of income by overriding title also, assesse has no case. 42. In other assessment ....
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....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 present case the assessee himself has credited the same to the profit and loss account as income. 45. He further stated that the reliance placed by the assessee on bass international Holdings and we vs joint Commissioner of income tax Mumbai in ITA number 4341/MU M/2002 dated is also distinguishable on the facts of the case. 46. On the admission of additional evidences for assessment year 2002 - 03 and 2003 - 04 with respect to the expenditure of the Pepsi he submitted that it is an outsider and not covered in the tripartite agreement as the same company is neither a member and there is no use of additional evidences filed by the assessee he further submitted that the Pepsi has been held to be an outsider by the honourable High Court and the coordinate bench both. He further stated that merely displaying the name of the Pepsi does not make it a contributor and beneficiary both. He ....
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....lication 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. He submitted that MA was filed. On 25/08/2008 which is apparent at page number 21 of the appeal before the honourable High Court. He referred to para number 4 of the order of the coordinate bench disposing of the miscellaneous application wherein it is stated that the miscellaneous application was filed before the tribunal prior to the appeal filed before the honourable High Court. Further the coordinate bench has also held that it can rectify its order as the said issue cannot be said to have merged in the order of the honourable High Court placing reliance on the decision of the honourable Gujarat High Court in case of Nirma industries Ltd vs THE DEPUTY COMMISSIONER OF INCOME TAX 283 ITR 402. c. On the issue of the merger of the order of the coordinate bench with the order of the honourable High Court he submitted that the issue of mer....
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.... 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 and the honourable Delhi High Court has held that amount received by the assessee towards the contribution for advertisement marketing and promotion expenditure is not tainted with mutuality but, thus, income of the assessee chargeable to income tax under the income tax act. 12. The brief facts, despite the indulgence of duplicity, stated that assessee earlier known as Tricon Restaurants marketing private limited was established as a wholly owned step-down subsidiary of Tricon restaurants (India) Private Ltd to manage advertising, marketing and promotional activities at regional and national level of brands currently owned or to be acquired in future by Tricon restaurants (India) Private Ltd. This company has been setup pursuant to approval dated 05/10/1998 of the Ministry of industry for carryi....
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....ands. 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 company, which is now paid by those franchisee owners to the assessee. This sum is shown now as advertisement contribution received by the assessee. Undoubtedly the above sum is credited to the profit and loss account. Out of these contributions, various types of expenditures have been incurred by the assessee. To look at the balance sheet of the assessee for assessment year 2001 - 02 the assessee has received the total contribution of INR 2646 9546/-, shown as advertising contribution from franchisee, holding company and key associates. Out of this the assessee has incurred the advertisement marketing and promotional expenditure of INR 21 256032/-. Other preliminary expenses and advertisement expenses of Rs. 454992/- and INR 1 90272/- were also incurred resulting into the excess of income over ex....
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....ibutions 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 during the following accounting period. Alternatively, assessee may subject to the approval of its board of directors refund the surplus amounts to the franchisees including franchisee in the same proportion as the actual advertising contribution made by each franchisee including franchisee in that accounting period. It is further provided that assessee as well as the holding company shall not be obliged to fund any deficit. According to clause 8.5 of the agreement it is clearly understood that only objective of the assessee is to coordinate the marketing activity of the grounds including the mutual benefit of the franchisee including the franchisee. It is further and recent that no profits will be on and no dividends will be declared by assessee. Further according to clause 10 of the agreement this o....
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....xpenditure. 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 Rs. 4444002/- has already been decided by the honourable High Court. Even before the honourable High Court the assessee did not press the issue with respect to the alternative grounds taken before the coordinate bench about the claim of 'diversion by overriding title' of the above sum. Against the order of the honourable High Court the assessee approached the honourable Supreme Court with petition for special leave to appeal in No. 20571/2009 and honourable Supreme Court as per order dated 26/03/2010 granted the leave and directed the parties to expedite the hearing and complete their pleadings within 8 weeks. Meanwhile, assessee preferred a miscellaneous application before the coordinate bench which recalled the order of the coordinate bench passed on 31/01/2008 to the extent for adjudicating the ground number 1(b) raised by the assessee. On careful reading of the order of the learned CIT - A in the above case at page ....
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.... 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-taxability of the above excess on the ground of diversion by overriding title before the honourable High Court when the appeal was argued before it. 16. Further, no evidence has been shown by the assessee that while arguing the original appeal before the coordinate bench assessee made any submission with respect to ground number 1 (b) raised in its grounds of appeal. Though the coordinate bench while recalling the order and allowing the miscellaneous application of the assessee has held that the logbook did not show any remarks that assessee did not press that ground. However the order of recalling also did not mention that assessee advanced any argument on the ground. Naturally no arguments were mentioned before the coordinate bench when the matter originally heard and same was also not agitat....
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....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 expenditure' [Ground 1.5 of the Grounds of Appeal filed before the Commissioner of Income tax (Appeals)]. 5. The learned Commissioner of Income tax (Appeals) has erred both on facts and in law in holding that the order of the Assessment Officer is not contrary to the principles of natural justice. 6. The learned Commissioner of Income-tax (Appeals) has erred both on facts and in law in upholding the levy of interest under section 234B of the Income Tax Act, 1961 by the Assessing Officer." 21. Ground no 1 is general in nature and hence dismissed. 22. With respect to ground no. 2, In assessment year 2002 - 03 the assessee has made an application for admission of the additional evidences as per appl....
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....he 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 International LLC. The site has further been sublicensed by the holding company to its respective franchisee in accordance with the franchisee agreement. As per the franchisee agreements, each franchisee required to pay a certain percentage of their sales to holding company as royalty for use of the rights granted to them under the agreement. In support of this contention the learned authorised representative drew the attention of the coordinate bench towards the franchisee agreement. Further it was stated that when the appellant would advertise on behalf of the franchisees, the same would lead to increase sales for the franchisees. Increase sales for the fr....
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....he 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 by the assessee the learned departmental representative also submitted that even these additional evidences admitted by the assessee does not show that there is a mutuality principal applicable to the facts of the case. 27. We have carefully considered the rival contention and perused the application of the assessee under rule 29 of the income tax appellate tribunal rules, which deal with the additional evidences. However the 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 assesse....
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....estion 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 stated to be increased sales of the franchisees, which results into higher royalty payment to the holding company by those franchisees. Therefore it is apparent that the contribution made by the holding company to the appellant is tinged with commercial considerations. Similarly the advertisement material showed by the assessee wherein the Pepsi is also advertised. The argument of the assessee is that such advertisement made by the assessee will also improve the sales of Pepsi foods Ltd. Therefore, 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 a....
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....articular 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 selling of yarn and it used to realize certain amounts on account of Charity from its customers on sale of yarn and bales of cotton this amounts were collected through bills and same were shown in a separate column. Assessee did not credit the amount of the mother so realized by it in its trading account but it maintained the separate account known as the mother account in which realization on account of Charity were credited and payments made outward debited from that account time to time. Thus, it was held that those amounts were held in trust by the assessee. The honourable High Court in that particular case held that the ass....
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.... 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 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 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. In the present case it is after the receipt of the income it is the obligation of the assessee to spend it for the advertisement and marketing activities of its holding company and its franchisees. Thus the income of the assessee af....
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.... 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 does not help the case of the assessee. 34. In view of the above facts, judicial precedent cited before us by the learned authorised representative does not support the case of the assessee in view of the nature of the receipt as well as the purpose for which the assessee, appellant company was formed. The operating agreement submitted before us also support the above view. The board of directors of the appellant company is also decided by the holding company. The franchisees were also required to report their sales along with the contribution there are also terms and conditions attached to the contribution, which ....
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....ciate 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 contributions received from the licensees of its holding company and/or other sources. Therefore main object is stated in the memorandum of Association of the assessee also shows that there is no obligation at the time of receipt of the income. Further merely mentioning that it will act on the non-profit basis does not make the income received by the assessee has received diverted by overriding title. However, we do not find any clause in the memorandum of Association or articles of Association of the above company, which created any obligation on the income of the assessee company. ....
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....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 may not be determinative , however the business functions, various agreements, approvals, conditions attached in the agreements clearly show that it is a business arrangement. The issue whether an income is 'diverted by overriding title' or 'applied' cannot be answered with a straitjacket formula and each case has to be decided based on its own merits looking at the specific arrangements made by the assessee. Each and every fact needs to be carefully examined before giving it colour of diversion of income by overriding title at source. The utmost significant factor in decidi....
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....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 Rs. 50,55,375/- in the hands of the Appellant. 2. The Learned CIT (A) has erred both on facts and in law in not adjudicating the grievance of the appellant that the assessment order has been passed contrary to the principal of natural justice. 2.1 That the ld CIT(A) has erred in law in not interfering with the unilateral action of the A.O. in confronting the Appellant with the material gathered by him during the course of assessment proceeding by the issue of notice under section 133(6) of the Act to the franchisees of YRIPL and used as a basis of the assessment. 3. That the Learned CI....
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.... 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 by overriding title. For the similar reasons we also dismiss ground number 1.2, 1.3 and 1.4 of the appeal of the assessee . 50. Ground number 2 of the appeal is with respect to grievance against the order of the assessee officer for not following the principles of natural justice and ground number 2.1 of the appeal is with respect to the material gathered by the assessing officer u/s 133 (6) of the income tax act. No specific arguments were advanced by the pa....
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.... 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 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. ....
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....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 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 iss....
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....ed 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 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 differen....
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....ot 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 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 ....
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....t 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 submitted that their argu....
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....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. 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 Pep....
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....tained 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 Rs. 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 in....
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.... 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 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 ....
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....2 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 Rs. 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 ....
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....rossly 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 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 11. That on the facts and in law, Ld. CIT(A) has failed to adjudicate 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 th....