YUM! RESTAURANTS MARKETING PVT. LTD.,GURGAON vs. ITO, WARD- 27(4), NEW DELHI

This appeal is filed by the assessee for assessment year 2012-13 against the order of the Ld. Commissioner of Income Tax (Appeals)– 15, New Delhi, dated 27.03.2017, raising the following grounds of appeal:- “ The following grounds of appeal are mutually exclusive of and without prejudice to each another- General Ground 1. That on the facts and in law, the impugned order passed by the Ld. Commissioner of Income Tax (Appeals) -15 (‘Ld. CIT(A)’) confirming the order of the Assessing Officer (‘AO’) and assessing the total income of the Appellant at Rs. 3,91,94,261 as against NIL returned income, is bad in law. Principle of Mutuality

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. The appellant craves leave to add, amend, alter, or withdraw any of the grounds of appeal before or at the time of hearing of this appeal. “ 2

The facts of the case shows that assessee is a Pvt. Ltd. Company engaged in the business of advertisement media and promotional activities exclusively for its holding company Yam! Restaurants (India) Pvt. Ltd. along with his franchisees at regional and national level. Thus, this company was performing a marketing function of the business of ‘Pizza Hut’, ‘KFC; and ‘Taco Bell’. The holding company of the assessee thus sells the Pizza and this company markets the Pizza. 03. The company filed its return of income on 28.09.2012 showing the surplus of income over expenditure amounting to Rs. 3,91,94,261/- and same was adjusted against the excess spent of earlier years. Thus, the return of income was ‘NIL’. Assessee stated that this income is not chargeable to tax because of the principles of mutuality and because of diversion of income by over- riding title. The ld. Assessing Officer dismissed this contention and determined the total income of the assessee at Rs. 3,91,94,260/- by order dated 17th March, 2015 passed under Section 143(3) of the Income Tax Act, 1961 (the Act). 04. Assessee preferred an appeal before the ld. CIT (Appeals) who dismissed the appeal on both the counts. 05. Before us, the ld. AR fairly conceded that both these issues are covered against the assessee by the decision of the co-ordinate bench in assessee’s own case for earlier years on the issue “ diversion of Income by overriding tittle” and by the decision of the Hon’ble Supreme Court in assessee’s own case on the principle of mutuality. However, he submitted that if the income is to be included then the assessee should be granted the benefit of carry forward of losses to be set off against this income.

The ld. DR fairly agreed with the argument of the assessee. 07. We have carefully considered the rival contentions and perused the orders of the lower authorities. The assessee’s first claim with respect to the income of the assessee not chargeable to tax because of principles of mutuality has already been decided by the Hon’ble Supreme Court in assessee’s own case reported in 424 ITR 630. The Hon’ble Supreme Court dismissed the appeal of the assessee. Thus, the income of the assessee is chargeable to tax and principle of mutuality does not apply. In view of this, ground Nos. 2–7 of the appeal, are dismissed. 08. With respect to ground Nos. 8 & 9 with respect to the income of the assessee not chargeable to tax on the principle of diversion of income by over-riding title, this issue is also covered against the assessee in assessee’s case by decision of ITAT for assessment years 2001-02 onwards in some of the years vide order dated 9th September, 2019 wherein the co-ordinate bench dealt with the above ground as per para No. 6 onwards and finally deciding in para No. 41 of that judgement, that there is no applicability of doctrine of diversion of income by over-riding title in this case. Therefore, grounds Nos. 8 & 9 are also covered against the assessee by the decision of the co-ordinate bench in assessee’s own case. Thus, these are dismissed. 09. Ground Nos. 10 & 11 are with respect to stating that there is a change in the facts of the case during the year and non- appreciation of the business model. However, no arguments were advanced on both these grounds and, therefore, same are dismissed. 10. Ground No. 12 is with respect to applicability of interest under Section 234-B of the Act, which is consequential in nature and, therefore, same is dismissed.