2018 (1) TMI 1219

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.... Industries Ltd. 2. The brief facts of the case are that the appellant along with Ford, USA and the affiliates entered into an agreement with RICO, India. The said agreement titled as Value Participation Agreement explained the role of each of the parties with reference to promotion and sales of auto components manufactured by RICO India. Essentially there are three parties in the agreement, constituting Ford India and Ford, USA and RICO, India. The auto components of RICO India are sold to Ford, USA, its affiliates and to non-ford companies like Volvo, Land Rover etc. The agreement states that there will be an Annual Incremental Purchase Payment in US dollars terms which will be fully remitted to the appellant as a percentage of increme....

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....ntified the appellant and the Ford, USA as one party. The ld. counsel strongly contested the demand proceedings on limitation. He submitted that the show cause notice is very cryptic and relied only on certain income shown in the balance sheet. The case was rather examined during the adjudication proceedings only. Further, the ld. counsel strongly contested the taxation of consideration received for terminating the arrangement with RICO. The value participation agreement dated 1.4.2003 was terminated on 6.5.2005. After terminating, the appellant received certain termination payment. There is no service attributable to such payment. This is more like a compensation for lost business opportunity. Such payments are never considered as services....

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.... who have purchased to components made and sold by RICO. The amount attributable to such purchase cannot be considered as promotion of RICO product to third party. Here, Ford is the single party of agreement consisting of appellant as well as Ford, USA. Apparently, the service of business promotion could have been attributed to both appellant as well as Ford, USA and affiliates. Only because the full amount is assigned to the appellant, tax liability on all the activities cannot be fastened on the appellant. However, we are not going into the full details for a finding on the case on merits. As the appellant contested the demand on limitation considering the intricacies of the provisions of the agreement and the appellant being not the sole....