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Clarifications on provisions of the Direct Tax Vivad se Vishwas Bill, 2020

..... 2020 Sub.: - reg. During the Union Budget, 2020 presentation, the Vivad se Vishwas Scheme was announced to provide for dispute resolution in respect of pending income tax litigation. Pursuant to Budget announcement., the Direct Tax Vivad se Vishwas Bill, 2020 (Vivad se Vishwas) was introduced in the Lok Sabha on 5th Feb, 2020. The objective of Vivad se Vishwas is to inter alia reduce pending income tax litigation, generate timely revenue for the Government and benefit taxpayers by providing them peace of mind, certainty and savings on account of time and resources that would otherwise be spent on the long-drawn and vexatious litigation process. Subsequently, based on the representations received from the stakeholders regarding its various provisions, official amendments to Vivad se Vishwas have been proposed, These amendments seek to widen the scope of Vivad se Vishwas and reduce the compliance burden on taxpayers. 2. After introduction of Vivad se Vishwas in Lok Sabha, several queries have been 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 form of .....

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..... etermined the total income of an assessment year and writ against such order is pending in HC, the appellant would be eligible to apply for the Vivad se Vishwas. The disputed tax in that 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 total income, it would not be possible to calculate disputed tax and hence such cases would not be covered. To illustrate, if AAR has given a ruling that there exists Permanent Establishment (PE) in India but the AO has not yet determined the amount to be attributed to such PE, such cases cannot be covered since total income has not yet been determined. Question No. 4 An appeal has been filed against the interest levied on assessed tax; however, there is no dispute against the amount of assessed tax. Can the benefit of the Vivad se Vishwas be availed? Answer: Declarations covering disputed interest (where there is no dispute on tax corresponding to such interest) are eligible under Vivad se Vishwas. It may be clarified that if there is a dispute on tax amount, and a declaration is filed for the disputed tax, the f .....

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..... et-aside issues the appeal is pending with the Commissioner(Appeals). Question No. 8 Imagine a case where an appellant desires to settle concealment penalty appeal pending before CIT(A), while continuing to litigate quantum appeal that has travelled to higher appellate forum. Considering these are two independent and different appeals, whether appellant can settle one to exclusion of others? If yes, whether settlement of penalty appeal will have any impact on quantum appeal? Answer: If both quantum appeal covering disputed tax and appeal against penalty levied on such disputed tax for an assessment year are pending, the declarant is required to file a declaration form giving details of both disputed tax appeal and penalty appeal. However, he would be required to pay relevant percentage of disputed tax only. Further, it would not be possible for the appellant to apply for settlement of penalty appeal only when the appeal on disputed tax related to such penalty is still pending. Question No. 9 Is there any necessity that to qualify under the Vivad se Vishwas, the appellant should have tax demand in arrears as on the date of filing declaration? Answer: Vivad se Vishwas can be availed .....

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..... some of the issues and not accept other issues? Answer: Refer to answer to question no 11. Picking and choosing issues for settlement of an appeal is not allowed. With respect to one order, the appellant must chose to settle all issues and then only he would be eligible to file declaration. Question No. 15 Will delay in deposit of TDS/TCS be also covered under Vivad se Vishwas? Answer: The disputed tax includes tax related to tax deducted at source (TDS) and tax collection at source (TCS) which are disputed and pending in appeal. However, if there is no dispute related to TDS or TCS and there is delay in depositing such TDS/TCS, then the dispute pending in appeal related to interest levied due to such delay will be covered under Vivad se Vishwas. Question No. 16 Are cases pending before DRP covered? What if the assessee has not filed objections with DRP and the AO has not yet passed the final order? Answer: Yes, a person who has filed his objections before the DRP under section 144C of the Act and the DRP has not issued any direction on or before the specified date as well as a person in whose case the DRP has issued directions but the AO has not passed the final assessment order .....

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..... ssioner (Appeals) is still available but the appeal has not yet been filed. Will such case be eligible to avail the benefit? Answer: Yes, the appellant in this case would also be eligible to avail the benefit of Vivad se Vishwas. In this case, the terms of availing Vivad se Vishwas in case of disputed penalty /interest/fee are similar to terms in case of disputed tax. Thus, if the time to file appeal has not expired as on specified date, the appellant is eligible to avail benefit of Vivad se Vishwas. In this case the appellant should indicate in the declaration form that time limit to file appeal in ITAT has not expired. Question No. 21 In a case ITAT has quashed the assessment order based on lack of jurisdiction by the AO. The department has filed an appeal in HC which is pending. Is the assessee eligible to settle this dispute under Vivad se Vishwas and if yes how disputed tax be calculated as there is no assessment order? Answer: The assessee in this case is eligible to settle the department appeal in HC. The amount payable shall be calculated at half rate of 100%,110%, 125% or 135%, as the case may be, on the disputed tax that would be restored if the department was to win the .....

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..... authority (DA). The disputed tax of ₹ 10,000 (at 100%) is to be paid on or before 31 March 2020. Since he has already paid ₹ 14,000, he would be entitled to refund of ₹ 4,000 (without section 244A interest). Further, the interest leviable under section 220 and penalty leviable shall also be waived. Question No. 27 Refer to question no 7. How will disputed tax be computed in a case where assessment has been set aside for giving proper opportunity to an assessee on the additions carried out by the AO? Answer: Please refer to answer to question no. 7. To illustrate, return of income was filed by the assessee. The tax on returned income was ₹ 10,000 and interest was ₹ 1,000. The amount of ₹ 11,000 was paid before filing the return. The AO made two additions of ₹ 20,000/- and ₹ 30,000/-. The tax (including surcharge and cess) on this comes to ₹ 6,240/- and ₹ 9,3601- and interest comes to ₹ 2,500 and ₹ 3,500 respectively. Commissioner (Appeals) has confirmed the two additions. ITAT confirmed the first addition (₹ 20,000/-) and set aside the second addition (₹ 30,000/-) to the file of AO for verification w .....

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..... interest or fee in case of dispute related to disputed penalty, interest or fee only. (b) In case payment is made after 31st March, 2020 - (i) 55% of the disputed tax (67.5% in search cases) in cases of dispute related to disputed tax, or (ii) 15% of the disputed penalty, interest or fee in case of dispute related to disputed penalty, interest or fee only. Question No. 29 Whether credit for earlier taxes paid against disputed tax will be available against the payment to be made under Vivad se Vishwas? Answer: The amount payable by the declarant under Vivad se Vishwas shall be determined by the DA under clause 5. Credit for taxes paid against the disputed tax before filing declaration shall be available to the declarant. Please refer to example at question no. 26 above. If in that example against disputed tax of ₹ 10,000 an amount of Rs. 8,000/- has already been paid, the appellant would be required to pay only the remaining Rs. 2,000/- by 31st March 2020. Question No. 30 Where assessee settles TDS appeal or withdraws arbitration (against order U/S 201) as deductor of TDS, will credit of such tax be allowed to deductee? Answer: In such cases, the deductee shall be allowed to .....

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..... Act. It is clarified that if the assessee has made payment against the addition representing section 40(a)(i)/(ia) disallowance, the assessee shall not be entitled to interest under section 244A of the Act on amount refundable, if any, under Vivad se Vishwas, It is further clarified that if the assessee wish to settle disallowance under section 40(a)(i)/(ia) in a search case on the basis of settlement of the dispute under section 201, he shall be required to pay higher amount as applicable for search cases for settling dispute in respect of that TDS default under section 201. Question No. 32 When assessee settles his own appeal or arbitration under Vivad se Vishwas, will consequential relief be available to the deductor in default from liability determined under TDS order U/S 201? Answer: When an assessee (being a person receiving an income) settles his own appeal or arbitration under Vivad se Vishwas and such appeal or arbitration is with reference to assessment of an income which was not subjected to TDS by the payer of such income (deductor in default) and an order under section 201 of the Act has been passed against such deductor in default, then such deductor in default would .....

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..... m. What about the other two issues as the taxpayer is not sure if the department will file appeal or not? Answer: The Vivad se Vishwas allow declaration to be filed even when time to file appeal has not expired considering them to be a deemed appeal. Vivad se Vishwas also envisages option to assessee to file declaration for only his appeal or declaration for department appeal or declaration for both. Thus, in a given situation the appellant has a choice, he can only settle his deemed appeal on three issues, or he can settle department deemed appeal on two issues or he can settle both. If he decides to settle only his deemed appeal, then department would be free to file appeal on the two issues (where the assessee has got relief) as per the extant procedure laid down and directions issued by the CBDT. Question No. 37 There is no provision for 50% concession in appeal pending in HC on an issue where the assessee has got relief on that issue from the SC? Answer: If the appellant has got decision in his favour from SC on an issue, there is no dispute now with regard to that issue and he need not settle that issue. If that issue is part of the multiple issues, the disputed tax may be ca .....

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..... e to the declarant containing particulars of the tax-arrear and the amount payable after such determination. The declarant shall pay the amount so determined within fifteen days of the date of receipt of the certificate and intimate the details of such payment to the DA in the prescribed form. Thereafter, the DA shall pass an order stating that the declarant has paid the amount. It may be clarified that 15 days is outer limit. The DAs shall be instructed to grant a certificate at an early date enabling the appellant to pay the amount on or before 31st March, 2020 so that he can take benefit of reduced payment to settle the dispute. Question No. 42 If taxes are paid after availing the benefits of the Vivad se Vishwas and later the taxpayer decides to take refund of these taxes paid, would it be possible? Answer: No. Any amount paid in pursuance of a declaration made under the Vivad se Vishwas shall not be refundable under any circumstances. Question No. 43 Where appeals are withdrawn from the appellate forum, and the declarant is declared to be ineligible under the Vivad se Vishwas by DA at the stage of determination of amount payable under section 5(1) or, amount determined by DA i .....

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..... e forum or arbitrator, conciliator or mediator shall proceed to decide any issue relating to the tax arrears mentioned in the declaration in respect of which order is passed by the DA or the payment of sum determined by the DA. Question No. 48 There is no provision for withdrawal of appeal/writ/SLP by the department on settlement of dispute Answer: On intimation of payment to the DA by the appellant pertaining to department appeal/writ/SLP, the department shall withdraw such appeal/writ/SLP. Question No. 49 Once declaration is filed under Vivad se Vishwas, and for financial difficulties, payment is not made accordingly, will the declaration be null and void? Answer: Yes it would be void. Question No. 50 Where the demand in case of an assessee has been reduced partly or fully by giving appeal effect to the order of appellate forum, how would the amount payable under Vivad se Vishwas be adjusted? Answer: In such cases, after getting the proof of payment of the amount payable under Vivad se Vishwas, the AO shall pass order under the relevant provisions of Vivad se Vishwas to create demand in case of assessee against which the amount payable shall be adjusted.} "QUESTIONS RELATED .....

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