Income tax vide Notification No.118/2021 dated 1st October, 2021 has Notified about the Rule 11UE of the Income Tax Rules, 1962 relating to Retrospective Taxation which shall not be relevant to apply on ‘Indirect Transfer’ of assets located in India prior to 28th May 2012.
The Rule specifies that no tax demand shall be raised on the basis of an
amendment to Section 9 of Income-tax Act, 1961 vide Finance Act, 2012 for any offshore indirect transfer of Indian assets before 28-05-2012, the date when Finance Act, 2012 was enacted.
Explanation 5 to Section 9 specifies that an asset or a capital asset being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be and shall always be deemed to have been situated in India, if the share or interest derives, directly or indirectly, its value substantially from the assets located in India.
Rule 11UE provides that declarant shall furnish an undertaking in Form No.1(specified in Rule 11UF) and shall append the undertakings from all the interested parties in Part M of the Annexure to the undertaking in Form No.1 and furnish all the attachments required to be furnished in order to comply with proviso to Explanation 5 of Section 9(1) i.e, in the following cases:
i) An assessment or reassessment has been made under section 143(Assessment), section 144( Best Judgement Assessment), section 147( Income escaping Assessment) or section 153A(Assessment in case of search or requisition) or section 153C(Assessment of any other person); or
ii) An order has been passed enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154(Rectification of mistake); or
iii) An order has been passed deeming a person to be an assessee in default under sub-section (1) of section 201(Consequences of failure to deduct or pay).
In case an order has been passed imposing a penalty under Chapter XXI or under section 221, the following are the conditions:
i) the declarant and all the interested parties shall irrevocably withdraw, terminate or discontinue all the appeals or applications or petitions or proceedings, against the relevant order or orders and furnish evidence thereof and a declaration in the undertaking in Form No. 1 to the effect that it shall not, under any circumstances, reopen or file any such appeal, application, petition or proceeding in future against the relevant order or orders.
ii) the declarant and all the interested parties shall irrevocably withdraw, terminate or discontinue all the proceedings for arbitration, conciliation or mediation, or notices thereof against the
relevant order or orders and furnish evidence thereof and a declaration in the undertaking in Form No. 1 to the effect that it shall not, under any circumstances, reopen or file any such proceeding or initiate any such arbitration, conciliation or mediation in future against the relevant order or orders.
Other conditions can be referred through the link attached below.
The execution, delivery and performance of the undertaking in Form No. 1 submitted by the declarant, undertakings from all the interested parties in Part M of the Annexure to the undertaking in Form No. 1 and indemnity bond by the declarant and interested parties in Part N of the Annexure to the undertaking in Form No. 1 shall be duly authorised by all necessary corporate action, including but not limited to any board resolution or similar authorisation under applicable law and a copy of such board resolution and legal authorisation shall be furnished by the declarant.