CBDT prescribes conditions to claim relief on offshore indirect transfer of Indian assets

Editorial Team

The Taxation Laws (Amendment) Act, 2021 (hereinafter referred to as 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.

These amendments provides that the provisions of indirect transfer of assets in India shall not apply to the assets transferred before 28-05-2012 (i.e., the date on which the Finance Bill, 2012 received the assent of the President). Accordingly, all pending assessments shall be deemed to have been concluded without additions for such income.

It is further provided that 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 fulfilment of specified conditions such as withdrawal or furnishing of undertaking for withdrawal of pending litigation and furnishing of an undertaking to the effect that no claim for cost, damages, interest, etc. shall be filed. Further, the amount paid/collected in these cases shall be refunded, without any interest, on fulfilment of the said conditions. The CBDT had issued the draft rules on 28-08-2021 prescribing the specified conditions to claim the above relief.

After examining the stakeholder comments on the draft rules, the CBDT has notified the final rules vide Notification No. GSR 713(E), dated 01-10-2021 wherein the following rules have been inserted to the Income-tax Rules, 1962:

(a) Rule 11UE provides for the specified conditions in order to be eligible to claim relief under TLA 2021; and

(b) Rule 11UF provides the form and manner of furnishing the undertaking for withdrawal of pending litigation, claiming no cost, damages, etc.

The summary of newly inserted rules has been incorporated in this article.

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