Re: Refund adjustments

5. Assessee wishes to settle year 1 and 2 under the appeal. Where year 1 is settled under VSV scheme it will result into refund (due to taxes paid earlier) and there is a demand in year 2.
A) Whether refund of year 1 can be adjusted against demand of year 2 while determining sum payable under VSV Scheme?
B) Whether any other crystallised refund from normal assessment can be adjusted against the demand for year 2 while determining sum payable under VSV Scheme?

There is no clarification available in amended Act/ FAQ.  

 

Our suggestions

 

• In such situation, flexibility may be given to the taxpayer to file single declaration for multiple assessment years so that demand and refund under VSV may be adjusted. 

 

• Further, where taxpayer has filed separate declaration for each assessment year, facility may be given for setting off amount payable under one declaration against refund due under another declaration such that net sum can be discharged. There is no reason to ask taxpayer to pay on one hand and grant refund on other hand.  

 

• Though, we understand that Department’s prima facie view is that netting off of refund against demand will not be allowed.  However, this should be reconsidered.

 

 

 

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