CBDT releases FAQs on provisions of Direct Tax Vivad se Vishwas Bill, 2020

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The Central Board of Direct Taxes (“CBDT”) has issued Circular No. 07/2020 dated March 04, 2020, which clarified the queries related to the “Direct Tax Vivad se Vishwas Bill, 2020” (“The Scheme”). The followings are a few clarifications issued by the board which are discussed as hereunder:

Q No. 1: Which appeals are covered under the Vivad se Vishwas?

Ans: Appeals pending before the appellate forum [Commissioner (Appeals), Income Tax Appellate Tribunal (ITAT), High Court or Supreme Court], and writ petitions pending before High Court (HC) or Supreme Court (SC) or special leave petitions (SLPs) pending before SC as on the 31st day of January 2020 (specified date) are covered. Cases where the order has been passed but the time limit for filing appeal under the Income-tax Act, 1961 (the Act) against the order has not expired as on the specified date are also 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 the Assessing Officer (AO) has not yet passed the final order on or before the specified date are also covered. Cases where revision application under section 264 of the Act is pending before the Principal Commissioner or Commissioner are covered as well. Further, where a declarant has initiated any proceeding or given any notice for arbitration, conciliation or mediation as referred to in clause 4 of the Bill is also covered.

Q No. 2: If there is no appeal pending but the case is pending in arbitration, will the taxpayer be eligible to apply under Vivad se Vishwas? lf yes, what will be the disputed tax?

Ans: 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.

Q No. 3: Whether Vivad se Vishwas can be 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 be covered and how disputed tax to be calculated?

Ans: 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 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.

The Complete FAQ’s can be assessed at: http://www.a2ztaxcorp.com/wp-content/uploads/2020/03/cbdt-releases-faqs-on-provisions-of-‘direct-tax-vivad-se-vishwas-bill-2020.pdf