JUDGMENT

JUDGMENT

K.S. Jhaveri, J. —All these appeals arise out of the judgments delivered by the Income Tax Appellate Tribunal. In some of the appeals, the assessee is the appellant and in some of the matters, the Department has come by way of appeals. However, time and again the matter was adjourned and all these appeals are clubbed in view of the fact that questions of law involved in all these appeals are somewhat identical.

2. The basic question which was put forth for our consideration is whether the arrangement which has been worked out between the assessee company and the distributor (Agency) claimed by the Income Tax Department are covered under the provisions of Sections 194 H and/or 194 J of the Income Tax Act.

3. To come out all these appeals, first of all, we will give the questions which were posed in different appeals:

3.1 D.B. Income Tax Appeal No. 205 of 2005 admitted on 30.08.2005.

"(i) Whether in the facts and circumstances of the case the learned Tribunal was right and justified in holding that assessee was liable to withhold tax at source under Section 194H of the Income Tax Act, 1961 amounting to Rs. 19,74,842/- (including interest) in respect of sales to its distributors, which are on a principal to principal basis and wherein property in the goods is transferred to the distributors?

(ii) Whether the Tribunal was justified in ignoring the statutory books of accounts, the auditors report and the certificate issued by the auditors and merely relying on the internal Management Information System records in coming to the conclusion on the nature of the dealings with the distributors?

(iii) Whether on the facts and in the circumstances of the case the Tribunal erred in law in holding that interest under Sections 201 (1A) and 220 (2) of the Income Tax Act, 1961 should be levied on the appellant when the taxes due had already been paid by the distributor(s)/ when a valid stay of recovery has been obtained? "

3.2 D.B. Income Tax Appeal No. 206 of 2005 admitted on 31.08.2005.

"(i) Whether in the facts and circumstances of the case the learned Tribunal was right and justified in holding that assessee was liable to withhold tax at source under Section 194H of the Income Tax Act, 1961 amounting to Rs. 42,43,729/- (including interest) in respect of sales to its distributors, which are on a principal to principal basis and wherein property in the goods is transferred to the distributors?

(ii) Whether the Tribunal was justified in ignoring the statutory books of accounts, the auditors report and the certificate issued by the auditors and merely relying on the internal Management Information System records in coming to the conclusion on the nature of the dealings with the distributors?

(iii) Whether on the facts and in the circumstances of the case the Tribunal erred in law in holding that interest under Sections 201 (1A) and 220 (2) of the Income Tax Act, 1961 should be levied on the appellant when the taxes due had already been paid by the distributor(s)/ when a valid stay of recovery has been obtained?"

3.3 D.B. Income Tax Appeal NO. 10 of 2007 admitted on 07.02.2007.

"(a) Whether in the facts and circumstances of the case the learned Tribunal was justified in holding the appellant as an assessee in default under section 201 of the Act, for alleged failure to deduct tax at source under Section 194 H of the Act in respect of sales to its distributors, which are on a principal to principal basis and wherein property in the goods is transferred to the distributors?

(b) Whether on the facts and circumstances of the case, selective reliance can be validly placed by the Tribunal on the management Information System records and other extraneous records on irrelevant considerations, ignoring statutory financial books of account in arriving at any conclusion with regard to the character of dealings between the Appellant and the distributors?

(c) Whether on the facts and in the circumstances of the case the Tribunal erred in la