TaxTMI 
TaxTMI 
Clarification on provisions of the Direct Tax Vivad se Vishwas Act, 2020
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....d these queries and had decided to clarify the same in form of answers to frequently asked questions (FAQs) vide circular no 7 of 2020 dated 4th March 2020. These clarifications were, however, subject to approval and passing of the bill by the Parliament and receiving assent of the Hon'ble President of India. 3. The Bill has since been passed by the Parliament and has also received the assent of the Hon'ble President of India and has now been enacted as The Direct Tax Vivad Se Vishwas Act, 2020 ( Vivad se Vishwas). The objective of Vivad se Vishwas is to inter ailia 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. 4. 55 questions contained in circular no 7 of 2020 are reissued under this circular with following modifications (i) Vivad se Vishwas referred to Direct Tax Vivad se Vishwas Bill, 2020 in circular no 7. However, in this circular it refers to The Direct Tax Vivad Se Vishwas Act, 2020; (ii) Since clauses of the Bill have now....
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....d as well. Further, where a declarant has initiated any proceeding or given any notice for arbitration, conciliation or mediation as referred to in section 4 of the Bill is also covered. Question No. Answer: 2 If there is no appeal pending but the case is pending in arbitration, will the taxpayer he eligible to apply under Vivad se Vishwas? If yes what will he the disputed tax? An assessee whose case is pending in arbitration is eligible to apply for settlement under Vivad se Vishwas even if no appeal is pending. In such case assessee should fill the relevant details applicable in his case in the declaration form. The disputed tax in this case would be the tax (including surcharge and cess) on the disputed income with reference to which the arbitration has been filed. Question No. Answer: 3 Whether Vivad se Vishwas can he availed for proceedings pending before Authority of Advance Ruling (AAR)? If a writ is pending against order passed by AAR in a HC will that case he covered and how disputed tax to he calculated? Vivad se Vishwas is not available for disputes pending before AAR. However, if the order passe....
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....o search & seizure, out of which in 4 assessments, disputed tax is five crore rupees or less in each year and in remaining 3 assessments, disputed tax is more than five crore rupees in each year, declaration can be filed for 4 assessments where disputed tax is five crore rupees or less in each year. Question No. Answer: 7 If assessment has been set aside for giving proper opportunity to an assessee on the additions carried out by the AO. Can lie avail the Vivad se Vishwas with respect to such additions? If an appellate authority has set 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 carry out fresh examination of the issue with specific direction, the assessee would be eligible to avail Vivad se Vishwas. However, the appellant shall also be required to settle other issues, if any, which have not been set 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 c....
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..... Question No. Answer: 11. In case where disputed tax contains qualifying tax arrears as also non-qualifying tax arrears (such as, tax arrears relating to assessment made in respect of undisclosed foreign income): (i) Whether assessee is eligible to the Vivad se Vishwas itself? (ii) If eligible, whether quantification of disputed tax can exclude/ignore non-qualifying tax arrears? If the tax arrears include tax on issues that are excluded from the Vivad se Vishwas, such cases are not eligible to File declaration under Vivad se Vishwas. There is no provision under Vivad se Vishwas to settle part of a pending dispute in relation to an appeal or writ or SLP for an assessment year. For one pending appeal, all the issues are required to be settled and if any one of the issues makes the declaration invalid, no declaration can be filed. Question No. Answer: 12. If a writ has been. filed against a notice issued under section 148 of the Act and no assessment order has been passed consequent to that section 148 noti....
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....In this situation even if the final assessment order is not passed on or before the specified date, the assessee would be considered as the appellant and would be eligible to settle his dispute under Vivad se Vishwas. Disputed tax in such case would be computed based on the draft order. In the declaration in Form No 1, the declarant in this situation should indicate in the appropriate schedule that time to file objection with DRP has not expired. Question No. Answer: 17. If CIT (Appeals) has given an enhancement notice, can the appellant avail the Vivad se Vishwas after including proposed enhanced income in the total assessed income? The amendment proposed in the Vivad se Vishwas allows the declaration even in cases where CIT (Appeals) has issued enhancement notice on or before 31^st January, 2020. However, the disputed tax in such cases shall be increased by the amount of tax pertaining to issues for which notice of enhancement has been issued. Question No. Answer: 18. Are disputes relating to wealth tax, sec....
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....te 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 appeal in HC Question No. Answer: 22 In the case of an assessee prosecution has been instituted and is pending in court. Is assessee eligible for the Vivad se Vishwas? Further, where the prosecution has not been instituted but the notice has been issued, whether the assessee is eligible for Vivad se Vishwas? Where only notice for initiation of prosecution has been issued without prosecution being instituted, the assessee is eligible to file declaration under Vivad se Vishwas. However, where the prosecution has been instituted with respect to an assessment year, the assessee is not eligible to file declaration for that assessment year under Vivad se Vishwas, unless the prosecution is compounded before filing the declaration. Question No. Answer: 23 If the due date of filing appeal is after 31.1.2020 the appeal has not been filed, will such: case be eligible for Vivad se Vishwas? Yes Question No. Answer: 24 If appeal is filed before High Court....
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....w 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? Please refer to answer to question no. 7. To illustrate, return of income was filed by the assessee. The tax on returned income was Rs. 10,000 and interest was Rs. 1,000. The amount of Rs. 11,000 was paid before filing the return. The AO made two additions of Rs. 20,000/- and Rs. 30,000/-. The tax (including surcharge and cess) on this comes to Rs. 6,240/- and Rs. 9,360/- and interest comes to Rs. 2,500 and Rs. 3,500 respectively. Commissioner (Appeals) has confirmed the two additions. ITAT confirmed the first addition (Rs. 20,000/-) and set aside the second addition (Rs. 30,000/-) to the file of AO for verification with a specific direction. Assessee appeals against the order of ITAT with respect to first addition (or has not filed appeal as time limit to file appeal against the order has not expired). The assessee can avail the Vivad se Vishwas if declaration covers both the additions. In this case the disputed tax would he the sum of disputed tax on both the additions i.e. Rs. 6240/-plu....
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.... is made after 31^st 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. Answer: 29. Whether credit for earlier taxes paid against disputed tax will be available against the payment to he made under Vivad se Vishwas? The amount payable by the declarant under Vivad se Vishwas shall be determined by the DA under section 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 Rs. 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. Answer: 30. Where assessee settles TDS appeal or withdraws arbitration (against order u/s 201) as deductor of TDS, will credit of such tax he allowed to deductee? Answer: ....
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....e ignored for calculating disputed tax, in accordance with the proviso to section 40(a)(i)/(ia) of the 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. Question No. Answer: 32. When assessee settles his own weal or arbitration under Vivad se Vishwas, will consequential relief he available to the deductor in default from liability determined under TDS order u/s 201? 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 not be required to pay the corresponding TDS amount. However, he would be required to pay the interest under sub-section (1A) o....
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.... will file appeal or not? 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. Answer: 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? 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 he calculated on other issu....
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....hwas? As per section 5 of Vivad se Vishwas, the DA shall determine the amount payable by the declarant within fifteen days from the date of receipt of the declaration and grant a certificate 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. Answer: 42. If taxes are paid after availing the benefits of the Vivad se Vishwas and later the taxpayer decides to lake refund of these taxes paid, would it be possible? No. Any amount paid in pursuance of a declaration made under the Vivad se Vishwas shall not be refundable under any circumstance....
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....Answer: 46. Whether DA can amend his order to rectify any patent errors? Yes, the DA shall be able to amend his order under section 5 to rectify any apparent errors. Question No. Answer: 47. Where tax determined by DA is not acceptable can appeal be filed against the order of designated authority before ITAT, high Court or Supreme Court? No. As per section 4(7), no appellate 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. Answer: 48. There is no provision for withdrawal of appeal/writ/SLP by the departnient on settlement of dispute On intimation of payment to the DA by the appellant pertaining to department appeal/writ/SIT, the department shall withdraw such appeal/writ/SLP. Question No. Answer: 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? Yes it would he void. Question No. Answer: 50 Where the dema....