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B S Jindal & Akhil Jindal
The Kar Vivad Samadhan Scheme (KVSS) is coming to an end on December 31, 1998. Till the very end, the CBDT is making every effort to encourage more people to avail of the scheme. The Board has announced several concessions and clarifications to make this possible.
Departmental appeal to be withdrawn: The constitutional validity of the KVSS was challenged in the High Court of Delhi in a public interest litigation. The High Court subsequently upheld the KVSS, except for clause 92 which provides that departmental appeals shall not be withdrawn.
Earlier the scheme allowed the assessees to withdraw their appeal regarding a dispute and settle it by availing of the KVSS and depositing the concessional tax. The assessees, however, did not have the option of going in for the scheme, if in the event of an order of an appellate the department itself had gone into appeal against it. The dispute would have remained alive even if the assessee wanted to change his stand and pay the concessional tax on thedisputed income.
The Board, after accepting the High Court's decision, had issued a press release to that effect. The effect of the judgment is such that all pending departmental appeals will be eligible to be covered under the Samadhan scheme, provided the original demand was determined on or before 31.3.1998.
The department has been advised to withdraw the appeal in instances where the assessees come forward with the objective of availing of the KVSS.
KVSS available to partners of the firm: Up to assessment year 1993-94, partnership firms were paying tax at a concessional rate of 4-24 per cent. The partners of the firms were also required to pay tax on their share profit from the firm, together with any other income, at the designated rate of taxes.
Firms which wanted to declare their disputed income for the year prior to assessment year 1993-94, had to first of all pay tax at the rate of 35 per cent on the disputed income of the firm, and thereafter the partners also had to pay 30 per centon their shares of profit. Thus, firms ended up paying much more taxes than the scheme had aimed for. To ameliorate this problem, the Board has taken the following measures:
1. Where a registered firm and all its partners file declarations in respect of assessment up to assessment year 1992-93, the arrears of the firm and partners would be considered together and they may pay taxes at the current rate of 35 per cent of the disputed income of the firm. The partners would not than be required to pay any additional tax on their profit share income from the firm. However, the partners declaration have to be filed along with that of the firm.
2. In case the partners are eligible for KVSS in respect of any other disputed income, they will have to file a declaration for such income along with that of the firm.
3. Such partners will have to pay taxes at the rate of 30 per cent on their other disputed income, apart from the tax on their declared share profit.
4. Partners who have already filed declarations cannow file a revised declaration as per the new norms.
The benefit extends only to the firms whose disputed income pertain to the assessment year prior to 1993-94.
Under the existing provisions, firms are required to pay normal taxes at the rate of 35 per cent, and the partners are not required to pay tax on their share income. Henceforth, firms will have to make the declaration and the partners will not be required to do anything on account of their share profit.
The Jindals are Delhi-based chartered accountants.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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