Read and express views
× Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India

These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.

09-09-2019, Yum! Restaurants Marketing, Section 133(6), 4, 254(2), Tribunal Delh

  • amit
  • amit's Avatar Topic Author
  • Offline
  • Administrator
  • Administrator
4 months 2 weeks ago #10772 by amit
Section - 133(6), 4, 254(2), 11
Order Date - 09-09-2019
Favouring - Assessee
Court - Tribunal Delhi
Appellant - Yum! Restaurants Marketing Pvt. Ltd
Respondent - ITO
Citation - 919Taxpundit93
Appeal No. - ITA No. 2561/Del/2018
Asstt. Year - 2013-14



1. These nine appeals are pertaining to one assessee for different assessment years involving similar grounds and issues in appeal. Therefore, both the parties argued the matter together and hence, same are disposed of by this common order.

AY 2001-02

2. First, we come to appeal of the assessee for AY 2001-02. Brief facts of the case shows that originally the appeal of the assessee was decided by the coordinate bench in ITA number 3235/Del/2005 for assessment year 2001 – 02 vide order dated 31/01/2008. While deciding the issue 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 appea as per paragraph number 2 holding that the only issue, which arose in this case, is with respect to the taxability Vis a Vis Mutuality of Rs. 4444002/- being excess amount of income or expenditure. The honourable High Court dismissed the appeal of the assessee holding that the principle of mutuality would not be applicable to the instant case. Accordingly the order was passed by the honourable High Court on 1/4/2009 holding as under :-

“2. The only issue which arose in this case is with respect to the taxability of Rs 44,44,002/- being excess amount of income over expenditure. The said surplus had arisen on account of advertisement contributions received from the holding company of the assessee- company which remained unexpended.

2.1 The broad facts with respect to the above case have been delineated in the connected appeal entitled Yum! Restaurant (India) Pvt Ltd vs CIT; being ITA No. 192/2009, which was heard along with the present appeal. Judgment was reserved in both the appeals.

3. Briefly, the parent company, that is, Yum! Restaurant (India) Pvt Ltd (in short ―YRIPL‟) formerly known as Tricon Restaurants India Pvt Ltd was incorporated on 17.03.1994. The YRIPL had a license arrangement with Kentucky Fried Chicken International Holdings, Inc (in short „KFC‟) and Pizza Hut International LLC (in short ―PHILLC‟). The YRIPL sought permission from the Government of India, Ministry of Industry, Department of Industrial Policy and Promotion, Secretariat for Industrial Assistance (SIA), Foreign Collaboration, for setting up a wholly owned step-down subsidiary to manage retail restaurant business, for advertising and promotion at local store level, regional level and national level. By a letter dated 05.10.1998, 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 that the subsidiary would be a non-profit enterprise and that it would not repatriate its dividends out of the country.

3.1 Upon receiving the requisite permission the assesseecompany was incorporated on 08.06.1999.

3.2 In September 2000 the YRIPL, the assessee-company, as well as, the franchisees entered into tripartite agreements. Under the agreement, the assessee-company received contributions from the franchisees as well as the franchisees of the YRIPL to the extent of 5% of the gross sales in order to carry on co-operative advertising. The agreement also envisaged that the purpose of incorporating the assesseecompany was really to carry the marketing 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.

Click to view and download Full Free Judgement of Yum! Restaurants Marketing Pvt. Ltd vs. ITO

Unable to display Google Map.

Please Log in or Create an account to join the conversation.

Time to create page: 0.108 seconds

If You Appreciate What We Do Here On TaxPundit, You Should Consider:

We are thankful for your never ending support.

Latest Analysis - High Courts

CIT vs. Media World Wide Pvt. Ltd.

CIT vs. Media World Wide Pvt. Ltd.

CIT vs. Media World Wide Pvt. Ltd. Read More


CIT vs. Zuari Industries Ltd.

CIT vs. Zuari Industries Ltd.

CIT vs. Zuari Industries Ltd. Read More


  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46

Forum Features

Latest Case Laws
Latest Case Laws are instantly updated in the Forum into their respective section
Latest from CBDT
Latest Circulars, Notifications, Orders etc. from CBDT is updated in the Forum
Ask Experts
You can ask questions to the community
Support queries are either replied via mail or in the Forum so that others can be benefited
Press Releases
Latest Press Notes and Press Releases are updated in the Forum
Connect with Members
You can connect with our community members by replying to their queries

Recommended Articles



All content herein is the copyright of Taxpundit. No images, text, or any other content may be, reproduced or redistributed without the express written consent of Taxpundit.

All Rights Reserved. All Content Copyright.


Subscribe to our newsletter and stay updated on the latest developments and special offers!

Company Master Data Since 1900. More than 1.75 Million Records. Register/Login to get FREE access. Read more
Toggle Bar