CBDT extends provisions of Rules 11UE & 11UF to Section 119 of Finance Act, 2012

Notification No. 120/2021, dated 13-10-2021

The Taxation Laws (Amendment) Act, 2021 (TLA, 2021) inserted three provisos (Fourth, Fifth, and Sixth Proviso) in Explanation 5 to Section 9(1)(i) to give relief to certain eligible entities impacted by the retrospective amendment made to Section 9 by the Finance Act, 2012.

All the pending assessments shall be disposed of by AO, and the demand raised in concluded assessments or rectification orders for indirect transfer of Indian assets made before 28-05-2012 shall be nullified on the fulfillment of specified conditions. The CBDT vide Notification No. GSR 713(E), dated 01-10-2021, has notified rules 11UE and 11UF prescribing such specified conditions.

It should be noted that section 119 of the Finance Act, 2012 had also inserted a validation clause to validate all demands raised/notices sent in connection with the indirect transfer of assets. It was provided that any decision of any Court, Tribunal, etc., including the decision of the Supreme Court in Vodafone’s case (supra), which has held such indirect transfer as not falling within the scope of section 9(1)(i) will be disregarded.

The TLA, 2021, has also brought a consequential amendment to the above provision by inserting a proviso to Section 119 of the Finance Act, 2012. It was provided that Section 119 shall cease to apply to the person who fulfils certain conditions.

To specify such conditions, the Board has notified the relaxation of Validation (section 119 of the Finance Act, 2012) Rules, 2021. The said rules provide that form, manner of furnishing undertaking, and conditions to be satisfied by a person as prescribed by the Rules 11UE and 11UF shall mutatis mutandis apply to section 119 of the Finance Act, 2012.

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