Circular No. 42 of 2016
F.No.142/11/2016-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
(TPL Division)
***
New Delhi, dated 23rd December, 2016
Clarifications on the Direct Tax Dispute Resolution Scheme, 2016
The Direct Tax Dispute Resolution Scheme, 2016 (hereinafter referred to as ` the
Scheme') incorporated as Chapter X of the Finance Act, 2016 provides an opportunity
to tax payers who are under litigation to come forward and settle the dispute in
accordance with the provisions of the Scheme. The provisions of the Scheme have been
clarified vide Circular No.33 of 2016 dated 12.09.2016. Subsequently, further queries
have been received from the field authorities and other stakeholders. The Central
Government has considered the queries and decided to clarify the same in the form of
questions and answers as follows.-
Question No.1: There are cases where the Assessing Officer (AO) has made
addition on account of provisions under section 9 of the Income-
tax Act, 1961 (the Act), which was later retrospectively amended,
especially with regard to royalty and fees for Technical Services.
What would be the position of the case of an assessee vis-à-vis the
Scheme, where an addition has been made by AO before such
retrospective amendment? Whether the case would be treated as
one being in consequence of retrospective amendment and
accordingly whether the assessee would be eligible to avail the
benefit of the Scheme?
Answer: As per clause (g) of sub-section (1) of section 201 of the Finance
Act, 2016, `specified tax' includes a tax which is validated by an
amendment made to the Income-tax Act with retrospective effect.
Hence, a case where an addition has been made by AO before such
retrospective amendment and the addition has got validated by
such amendment, is eligible to avail the Scheme provided a dispute
in respect of such addition/tax is pending as on 29.02.2016.
Question No.2: There are assessees who have filed writ petitions in Courts against
the constitutional validity of retrospective amendment to the
Income-tax Act. Can the assessees who have filed such writs in
Courts still contest the constitutional validity of such
amendments, even after availing the benefit under the Scheme?
Answer: As per section 203(3)(a) of the Finance Act, 2016, where the
declaration under the Scheme is in respect of specified tax and the
declarant has filed any writ petition before the High Court or the
Supreme Court against any order in respect of the specified tax, he
shall withdraw such writ petition with the leave of the Court
wherever required and furnish proof of such withdrawal along
with the declaration filed under the Scheme. It is hence clear that if
the assessee avails the Scheme, he cannot contest the constitutional
validity of retrospective amendment in the High Court or Supreme
Court.
Question No.3: There are cases where assessees are in different stages of appeal for
different years on similar issue(s). In such a situation, if an
assessee avails the benefits of the Scheme for a particular
year/years, whether the revenue would withdraw its appeal
against the assessee, in the year(s) in which the assessee has got
the relief? If such is the case, at what stage would the revenue
withdraw its appeal?
Answer: In respect of `tax arrear', the Scheme is available only if dispute is
pending before Commissioner (Appeals). Hence the question of
withdrawal of appeal by revenue does not arise in such cases.
In respect of `specified tax', section 203(3) of the Finance Act, 2016
states that the declarant before opting for the said Scheme has to
withdraw his pending appeal or writ petition. It also states that in
a case where the declarant has initiated or given notice for
proceeding of arbitration, conciliation or mediation, he shall
withdraw such notice or claim prior to filing of the declaration
under the Scheme. The Scheme nowhere speaks of withdrawal of
any appeal or proceeding by the revenue. Hence, the question of
withdrawal of appeal by the revenue owing to opting of the
Scheme by the assessee in some other year(s) on a similar issue
does not arise.
Question No.4: Can the tax payments under the Scheme be allowed to be made in
instalments, as granted under IDS, 2016?
Answer: Since, the date of making payment under the Scheme is provided
in Section 204 of the Finance Act, 2016 itself, the tax payments
under the Scheme cannot be allowed to be made in instalments.
Question No.5: Whether an assessee is eligible to make a declaration in respect of
`specified tax' where a dispute was pending as on 29.02.2016 in
form of a reference made by AO before the Committee constituted
by CBDT on 28.08.2014 under section 119 of the Act, but the final
order determining the `specified tax' thereon was passed after
29.02.2016, and the appeal/writ/arbitration/conciliation/
mediation etc. in respect of the same was filed before
commencement of the Scheme i.e. 01.06.2016?
Answer: As per the provisions of the Scheme, a declarant may make a
declaration in respect of a `specified tax' for which a dispute was
pending as on 29.02.2016. The term `dispute pending as on
29.02.2016' refers to the tax determined under the Income-tax Act
or the Wealth-tax Act which has been disputed by the assessee. In
the above referred case, the specified tax has been determined by
AO after 29.02.2016; hence the question of dispute pending in
respect of such tax as on 29.02.2016 does not arise. Therefore, the
assessee in the present case is not eligible to avail the Scheme.
Question No.6: Whether a penalty order under section 271C or 271CA of the
Income-tax Act for which an appeal is pending with CIT(Appeals)
is covered under the Scheme?
Answer: As per the Scheme, `tax arrear' in case of penalty is linked to the
total income finally determined. Since, penalty order under section
271C or 271CA is not linked to the assessment proceedings, such
orders are not covered under the Scheme.
Question No.7: Whether the cases in which, consequent upon search, assessments
have been completed under section 143(3) of the Act shall be
eligible to avail the Scheme?
Answer: As the search cases are not eligible for the Scheme, an assessment
made consequent to search under section 143(3) read with section
153B of the Act is not eligible to avail the Scheme.
Question No.8: Clause(5) of section 203 of the Finance Act, 2016, refers to deemed
revival of `consequences' under the Income-tax Act or the Wealth-
tax Act, as the case may be, under which proceedings against the
declarant are or were pending. There is no explicit reference to
deemed revival of `proceedings'. Please clarify?
Answer: Clause (5) of section 203 provides that in a case where the
conditions specified therein are not fulfilled, it shall be presumed
as if the declaration was never made under the Scheme; therefore,
in case of rejection of declaration, the proceedings pending against
the assessee before issuance of certificate under 204(1) shall stand
revived.
(Dr. T.S. Mapwal)
Under Secretary to the Government of India
Copy to:
1. The Chairperson, Members and all other officers in CBDT of the rank of Under
Secretary and above.
2. All Pr. Chief Commissioners/ Pr. Director General of Income-tax with a request to
circulate amongst all officers in their regions/ charges.
3. Pr. DGIT (Systems)/ Pr. DGIT (Vigilance)/ Pr. DGIT (Admn.)/ Pr. DG (NADT)/ Pr.
DGIT (L&R).
4. CIT (M&TP), CBDT.
5. Web manager for posting on the departmental website.
|
