|Clarification on provision of Direct Tax|
During the Union Budget 2020 presentation, the 'Vivad se Vishwas' Scheme was announced to provide for dispute resolution in respect of pending tax litigation. Pursuant to Budget announcement, the tax Vivad se Vishwas Bill, 2020 (Vivad se Vishwas) was introduced within the Lok Sabha on 5th Feb, 2020.
the target of Vivad se Vishwas is to inter alia reduce pending tax litigation, generate timely revenue for the govt. and benefit taxpayers by providing them peace of mind, certainty and savings on account of some time and resources that might preferably be spent on the long-drawn and litigation process. Subsequently, based on representation received from stakeholder regarding the varied provision, official amendments to Vivad se Vishwas are proposed. These amendments seek to widen the scope Vivad se Vishwas that reduce an compliance burden of taxpayers.
After introduction of Vivad se Vishwas in Lok Sabha, several queries are received from the stakeholders seeking clarifications in respect of various provisions contained therein. Government has considered these queries and decided to clarify the same in kind of answers to commonly asked questions (FAQs).
Asked questions (FAQs).
Q1) Which appeals are covered under the Vivad se Vishwas?
Answer: Appeals pending before the appellate forum [Commissioner (Appeals), Income Tax Appellate Tribunal (ITAT), supreme court or Supreme Court], and writ petitions pending before supreme court (HC) or Supreme Court (SC) or special leave petitions (SLPs) pending before SC as on the 31,t day of January, 2020 (specified date) are covered. Cases where the order has been passed but the deadline for filing appeal under the Income-tax Act, 1961 (the Act) against the order has not expired as on the specified date also are covered. Similarly, cases where objections filed by the assessee against draft order are pending with Dispute Resolution Panel (DRP) or where DRP has given the directions but Assessing Officer (AO) has not yet passed the ultimate order on or before the specified date also are covered. Commissioner or Commissioner are covered also . Further, where a declarant has initiated any proceeding or given any notice for arbitration, conciliation or mediation as mentioned in clause 4 of the Bill is also covered.
Q2) If there's no appeal pending but the case is pending in arbitration, will the taxpayer be eligible to use under Vivad se Vishwas?
Answer: l.f yes what will be the disputed tax? An assessee whose case is pending in arbitration is eligible to use for settlement under Vivad se Vishwas albeit no appeal is pending. In such case assessee should fill the relevant details applicable in his case within the declaration form. The disputed tax during this case would be the tax (including surcharge and cess) on the disputed income with regard to which the arbitration has been filed.
Q3) Whether Vivad se Vishwas are often availed for proceedings pending b~fore Authority of Advance Ruling (AAR)? l.f a writ is pending against order gone by AAR during a HC will that case be covered and how disputed tax to be calculated?
Answer: Vivad se Vishwas isn't available for disputes pending before AAR. However, if the order gone by AAR has determined the entire income of an assessment year and writ against such order is pending in HC, the appellant would be eligible to use for the Vivad se Vishwas. The disputed tax therein case shall be calculated as per the order of the AAR and accordingly, wherever required, consequential order shall be passed by the AO. However, if the order of AAR has not determined the entire income, it might not be possible to calculate disputed tax and hence such cases wouldn't be covered. for instance , if AAR has given a ruling that there exists Permanent Establishment (PE) in India but the AO has not yet determined the quantity to be attributed to such PE, such cases can't be covered since total income has not yet been determined.
Q 4) Appeal Which has been filed against interest levied on a assessed tax; however, there's will no dispute against the quantity of the assessed tax. Can the ben~fit o.fthe Vivad se Vishwas be availed?
Answer: Declarations covering disputed interest (where there's no dispute on tax corresponding to such interest) are eligible under Vivad se Vishwas. It may be clarified that if there's a dispnte on tax amount, and a declaration is filed for the disputed tax, the complete amount of interest levied or leviable associated with the disputed tax shall be waived.
Q5) What if the disputed demand including interest has been paid by the appellant while being in appeal?
Answer: Appeals during which appellant has already paid the disputed demand either partly or fully also are covered. If the quantity of tax paid is quite amount payable under Vivad se Vishwas, the appellant are going to be entitled refund without the interest will under section 244A of the Act.
Q6) Can the advantage of the Vivad se Vishwas be availed, if an enquiry and seizure action by the Income-tax Department has been initiated against a taxpayer?
Answer: Case where the tax arrears relate to an assessment made under section 143(3) or section 144 or section 153A or section 153C of the Act on the basis of search initiated under section 132 or section 132A of the Act are excluded if the quantity of disputed tax exceeds five crore rupees in that assessment year. Thus, if there are 7 assessments of an assessee concerning search & seizure, out of which in 4 assessments, disputed tax is five crore rupees or less in annually and in remaining 3 assessments, disputed tax is more than five crore rupees in annually , declaration can he filed for 4 assessments where disputed tax is five crore rupees or less in annually .
Q7) If assessment has been put aside for giving proper opportunity to an assessee on the additions administered by the AO. Can he avail the Vivad se Vishwas with reference to such additions?
Answer: If an appellate authority has put aside an order (except where assessment is cancelled with a direCtion that assessment is to be framed de novo) to the file of the AO for giving proper opportunity or to hold out fresh examination of the difficulty with specific direction, the assessee would be eligible to avail Vivad se Vis/mas. However, the appellant shall even be required to settle other issues, if any, which haven't been put aside in that assessment and in respect of which either appeal is pending or time to file appeal has not expired. In such a case disputed tax shall be the tax (including surcharge and cess) which might are payable had the addition in respect of which the order was put aside by the appellate authority was to be repeated by the AO. In such cases while filling the declaration fonn, appellant can indicate that with reference to the set-aside issues the appeal is pending with the Commissioner(Appeals).