The Central Board of Direct Taxes (CBDT), on Friday, issued clarifications on the Direct Tax Dispute Resolution Scheme, 2016 which was introduced in the Finance act, 2016. In September, a circular had been issued by the Board clarifying the queries received from the field authorities and other stakeholders. The present circular throws light to some important clarifications with regard to the availability of the scheme.
As per the circular, in cases where the AO made additions with regard to Royalty and Fee for technical services before the retrospective amendment and the addition has got validated by such amendment, the assessee would be eligible to avail the Scheme provided a dispute in respect of such addition/tax is pending as on 29.02.2016.
The Circular states that the benefit of the scheme is available to an assessee who challenged the retrospective validity of the income tax provisions before the High Courts or the Supreme Courts. However, this is subject to conditions that 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 clarifies that the disputes with regard to “tax arrears” can be settled under the scheme only if dispute is pending before the commissioner of Income Tax (Appeals). “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.” The Board said.
With regard to the payment of tax under the scheme, it was clarified that the tax payments under the Scheme cannot be allowed to be made in installments.
The circular further states that the benefit of the scheme will not be available to the assessee in cases 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.
Penalty orders passed under sections 271C and 271CCA before the CIT(A) are not covered under the scheme since they are not linked to the assessment proceedings. It is further clarified that an assessment made consequent to search under section 143(3) read with section 153B of the Act is not eligible to avail the Scheme.
The Circular further clarifies the consequences of rejection of declaration made under the scheme. It states that “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.”
Read the full text of the circular below.
