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TMI BlogClarification on provisions of the Direct Tax Vivad se Vishwas Act, 2020X X X X Extracts X X X X X X X X Extracts X X X X ..... orm 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 become sections in the Vivad Se Vishwas, the reference to "clause" in circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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 passed by AAR has determined the total income of an assessment year and writ against such order is pending in HC, the appellant would he eligible to apply for the Vivad se Vishwas. The disputed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 cess) which would have been payable had the addition in respect of which the order was set aside by the appellate authority was to be repeated by the AO. In such cases while filling the declaration in Form No 1, the declarant can indicate in the appropriate schedule that with respect to the set-aside issues the appeal is pending with the Commissioner (Appeals). Question No. Answer: 8 Imagine a case wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 notice, will such case be eligible to file declaration under Vivad se Vishwas? The assessee would not be eligible for Vivad se Vishwas as there is no determination of income against the said notice. Question No. Answer: 13. With respect to interest under section 234A, 234B or 234C, there is no appeal but the assessee has filed waiver application before the competent authority which is pending as on 31 Jan 2020? Will such cases be covered under Vivad se Vishwas? No, such cases are not covered. Waiver applications are not appeal within the meaning of Vivad se Vishwas. Question No. Answer: 14. Whether assessee can avail of the Vivad se Vishwas for some of the issues and not accept other issues? Refer to answer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax pertaining to issues for which notice of enhancement has been issued. Question No. Answer: 18. Are disputes relating to wealth tax, security transaction tax, commodity transaction tax and equalisation levy covered? No. Only disputes relating to income-tax are covered. Question No Answer: 19. The assessment order under section 143(3) of the Act was passed in the case of an assessee for the assessment year 2015-16. The said assessment order is pending with ITAT. Subsequently another order under section 147/143(3) was passed for the same assessment year and that is pending with CIT (Appeals)? Could both or one of the orders be settled under Vivad se Vishwas? The appellant in this case has an option to settle either of the two appeals or both appeals for the same assessment year. If he decides to settle both appeals then he has to file only one declaration in Form No 1. The disputed tax in this case would he the aggregate amount of disputed tax in both appeals. Question No. Answer: 20. In a case there is no disputed tax. However, there is appeal for disputed penalty which has been disposed of by CIT (Appeals) on 1st January 2020. Time to file appeal in ITAT agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25 In a case appeal or arbitration is pending on the specified date, but a rectification is also pending with the AO which if accepted will reduce the total assessed income. Will the calculation of disputed tax be calculated on rectified total assessed income? The rectification order passed by the AO may have an impact on determination of disputed tax, if there is reduction or increase in the income and tax liability of the assessee as a result of rectification. The disputed tax in such cases would be calculated after giving effect to the rectification order passed, if any. Question No. Answer: 26. Refer to question number 5. How will disputed tax he calculated in a case where disputed demand including interest has been paid by the assessee while being in appeal? Please refer to answer to question no. 5. To illustrate, consider a non-search case where an assessee is In appeal before Commissioner (Appeals). The tax on returned income (including surcharge and cess) comes to ₹ 30,000 and interest under section 234B of ₹ 1,000. Assessee has paid this amount of ₹ 31,000 at the time of filing his tax return. During assessment an addition is made and additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vishwas? Under the Vivad se Vishwas, declarant is required to make following payment for settling disputes: A. In appeals / writ / SLP / DRP objections / revision application under section 264 / arbitration filed by the assessee - (a) in case payment is made till 31st March, 2020‑ (i) 100% of the disputed tax (125% in search cases) where dispute relates to disputed tax (excess amount over 100% limited to the amount of interest and penalty levied or leviable), or (ii) 25% of the disputed penalty, interest or fee where dispute relates to disputed penalty, interest or fee only. (b) In case payment is made after 31st March, 2020 - (i) 110% of the disputed tax (135% in search cases) where dispute relates to disputed tax (excess amount over 100% limited to the amount of interest and penalty), or (ii) 30% of the disputed penalty, interest or fee in case of dispute related to disputed penalty, interest or fee only. However, if in an appeal before Commissioner (Appeals) or in objections pending before DRP, there is an issue on which the appellant has got favourable decision from ITAT (not reversed by HC or SC) or from the High Court (not reversed by SC) in earlier years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 40(a)(i)/(ia) in the year in which the tax was required to be deducted. To illustrate, let us assume that there are two appeals pending; one against the order under section 201 of the Act for non-deduction of TDS and another one against the order under section 143(3) of the Act for disallowance under section 40(a)(i)/(ia) of the Act. The disallowance under section 40 is with respect to same issue on which order under section 201 has been issued. If the dispute is settled with respect to order under section 201, assessee will not be required to pay any tax on the issue relating to disallowance under section 40(a)(i)I(ia) of the Act, in accordance with the provision of section 40(a)(i)/(ia) of the Act. In case, in the order under section 143(3) there are other issues as well, and the appellant wants to settle the dispute with respect to order under section 143(3) as well, then the disallowance under section 40(a)(i)/(ia) of the Act relating to the issue on which he has already settled liability under section 201 would be ignored for calculating disputed tax. If the assessee has challenged the order under section 201 on merits and has won in the Supreme Court or the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax to be calculated? Please see question no. 8. Further, it is clarified that if the appellant has both appeal against assessment order and appeal against penalty relating to same assessment pending for the same assessment year, and he wishes to settle the appeal against assessment order (with penalty appeal automatically covered), he is required to indicate both appeals in one declaration form (Form No 1) for that year. Question No. Answer: 35. If there is substantive addition as well as protective addition in the case of same assessee for different assessment year, how will that be covered? Similarly if there is substantive addition in case of one assessee and protective addition on same issue in the case of another assessee, how will that be covered under Vivad se Vishwas? If the substantive addition is eligible to be covered under Vivad se Vishwas, then on settlement of dispute related to substantive addition AO shall pass rectification order deleting the protective addition relating to the same issue in the case of the assessee or in the case of another assessee. Question No. Answer: 36. In a case ITAT has passed order giving relief on two issues and confirming three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier years or 50%? In this case, on the issue where the taxpayer has got relief from ITAT in an earlier year (not reversed by HC or SC) the disputed tax shall be computed at half of normal rate of 100%, 110%, 125% or 135%, as the case may be. Question No. Answer: 40. Where there are two appeals filed for an assessment year- one by the appellant and one by the tax department, whether the appellant can opt for only one appeal? If yes, how would the disputed tax he computed? The appellant has an option to opt to settle appeal filed by it or appeal filed by the department or both. Declaration form is to be filed assessment year wise i.e. only one declaration for one assessment year. For different assessment years separate declarations have to be filed. So the declarant needs to specify in the declaration Form No 1, whether he wants to settle his appeal, or department's appeal in his case or both for a particular assessment year. The computation of tax payable would be carried out accordingly. "QUESTIONS RELATED TO PROCEDURE (Q. No. 41- 50)" Question No. Answer: 41. How much time shall be available for paving the taxes after filing a declaration antler the Vivad se Vishwas? A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s declarant to pay amount determined by DA within 15 days of receipt of certificate from DA. Clarification is required on whether declarant is to also intimate DA about fact of having made payment pursuant to declaration within the period of 15 days? As per section 5(2), the declarant shall pay the amount determined under section 5(1) 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 and thereupon the DA shall pass an order stating that the declarant has paid the amount. Question No. Answer: 45. Will DA also pass order granting expressly, immunity from levy of interest and penalty by the AO as well as immunity from prosecution? As per section 6, subject to the provisions of section 5, the DA shall not institute any proceeding in respect of an offence; or impose or levy any penalty; or charge any interest under the Income-tax Act in respect of tax an-ears. This shall be reiterated in the order under section 5(2) passed by DA. Question No. 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 ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be, has acquiesced in the decision on the disputed issue by settling the dispute. Question No. Answer: 53 If loss is not allowed to be adjusted while calculating disputed tax, will that loss be allowed to be carried. Forward? As per the amendment proposed in Vivad se Vishwas, in a case where the dispute in relation to an assessment year relates to reduction of Minimum Alternate Tax (MAT) credit or reduction of loss or depreciation, the appellant shall have an option either to (i) include the amount of tax related to such MAT credit or loss or depreciation in the amount of disputed tax and carry forward the MAT credit or loss or deprecation or (ii) to carry forward the reduced tax credit or loss or depreciation. CBDT will prescribe the manner of calculation in such cases. Question No. Answer: 54 If the taxpayer avails Vivad se Vishwas for Transfer Pricing adjustment, will provisions of section 92CE of the Act apply separately? However, it may be noted that the provision of secondary adjustment as contained in section 92CE of the Act is not applicable for primary adjustment made in respect of an assessment year commencing on or before the 1st day of April 2016. That me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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