Income-tax (31st Amendment) Rules, 2021

MINISTRY OF FINANCE
(Department Of Revenue)
(CENTRAL BOARD OF DIRECT TAXES),
New Delhi

Notification No. 118/2021-Income Tax

Dated: 1st October, 2021

G.S.R. 713(E).- In exercise of the powers conferred by clause (i), (ii), (iii) and (iv) of the Explanation to fifth and sixth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. Short title and commencement. - (1) These rules may be called the Income-tax (31st Amendment) Rules, 2021.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962 (hereinafter referred to as principal rules), in Part II, after the rule 11UD, the following sub-part and rules shall be inserted, namely: ‒

‘J – Indirect transfer prior to 28th May, 2012 of assets situate in India

11UE. Specified conditions under Explanation to fifth and sixth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9.− (1) For the purposes of clauses (i), (ii) and (iii) of the Explanation to fifth and sixth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9, the declarant shall furnish an undertaking in Form No. 1 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 under any clause or Part thereof.

(2) The conditions for the purposes of clause (iv) of the Explanation to fifth and sixth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9 shall be the following, namely: –

(a) 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;

(b) 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;

(c) the declarant and all the interested parties shall irrevocably withdraw, terminate or discontinue all the proceedings to enforce or pursue attachments in respect of any award, order or judgement or any other relief against the Republic of India or Indian affiliates with respect to 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 in future against the Republic of India or Indian affiliates with respect to the relevant order or orders;

(d) the declarant and all the interested parties shall irrevocably terminate, release, discharge, and forever irrevocably waive all rights, whether direct or indirect, and any claims, demands, liens, actions, suits, causes of action, obligations, controversies, debts, costs, attorneys’ fees, court’s fees expenses, damages, judgments, orders, declaratory relief, and liabilities of whatever kind or nature at law, in equity, or otherwise, whether now known or unknown previously (or in future discovered), suspected or unsuspected, and whether or not concealed or hidden, which have existed or may have existed, or do exist or which hereafter can, shall or may exist in relation to any award, order, judgment, or any other relief against the Republic of India or Indian affiliates in connection with 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;

(e) the declarant and all the interested parties shall irrevocably waive any right to seek or pursue any claim for costs in respect of any proceeding referred to in clauses (a), (b), (c) or (d), including but not limited to any proceeding initiated by the Republic of India to set aside the award, order or judgement, or any other relief, referred to in clauses(a), (b), (c) or (d), issued in favour of the declarant or any of the interested parties;

(f) the declarant and all the interested parties shall terminate, release, discharge, and forever irrevocably waive any right, whether direct or indirect, any remedies, claims, demands, liens, actions, suits, causes of action, obligations, controversies, debts, costs, attorneys’ fees, court’s fees, expenses, damages, judgments, orders, compensation, and liabilities of whatever kind or nature at law, in equity, or otherwise, whether now known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which have existed or may have existed, or do exist or which hereafter can, shall or may exist, based on pursuit of any remedy or any and all claims, demands, damages, judgments, awards, costs, expenses, compensation or liabilities of any kind (whether asserted or unasserted), in relation to any facts, events, or omissions occurring at any time in relation to taxation of income referred to in the fifth and sixth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9 or relevant order or orders, or any related award, judgment or court order, which may otherwise be available to the declarant or any of its interested parties;

(g) the declarant and all the interested parties shall indemnify, defend and hold harmless the Republic of India and Indian affiliates from and against any and all costs, expenses (including attorneys’ fees and court’s fees), interest, damages, and liabilities of any nature arising out of or in any way relating to the assertion or, bringing, filing or maintaining of any claim, at any time after the date of furnishing the undertaking in Form No. 1 by the declarant, by any person and the declarant and all the interested parties shall furnish an indemnity bond to this effect, such that the declarant and the interested parties fully assume the risk of any omission or mistake with respect to identification and procurement of authorisations and undertakings from any related parties or interested parties as provided in the undertaking, and secures the Republic of India and Indian affiliates from any claim related to any relevant order or orders, or in relation to any award, order, judgment, or any other relief against the Republic of India and Indian affiliates in connection with any relevant order or orders;

(h) the declarant and all the interested parties shall refrain from facilitating, procuring, encouraging or otherwise assisting any person (including but not limited to any related party or interested party) from bringing any proceeding or claims of any kind related to any relevant order or orders, or in relation to any award, order, judgment, or any other relief against the Republic of India or Indian affiliates in connection with any relevant order or orders; and

(i) the declarant and all the interested parties shall notify by a public notice or press release that, by signing the undertaking in Form No. 1 or Part M of the Annexure to the undertaking in Form No. 1, as the case may be, any claims arising out of or relating to the relevant orders or any related award, judgment or court order, no longer subsist, and that such person or entity issuing the public notice has signed the undertaking, and that such undertaking includes an indemnity against any claims brought against the Republic of India or any India affiliate contrary to the undertaking, and that the declarant and all the interested parties shall furnish a copy of such public notice to the Republic of India .

(3) 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.

11UF. Manner of furnishing undertaking under rule 11UE. − (1) The undertaking in Form No. 1 under sub-rule (1) of rule 11UE shall be submitted by the declarant to the jurisdictional Principal Commissioner or Commissioner within forty- five days from the date of commencement of the Income-tax (31st Amendment) Rules, 2021.

(2) After the undertaking in Form No. 1 under sub- rule (1) of rule 11UE is furnished by the declarant, the jurisdictional Principal Commissioner or Commissioner shall, within a period of fifteen days from the date of receipt of the said undertaking, –

(a) grant a certificate in Form No. 2 accepting such undertaking; or

(b) pass an order rejecting such undertaking, where the undertaking in Form No. 1 is incorrect or incomplete or any part thereof or any of the attachments or evidences or the indemnity bonds provided therein or any of the authorisations, as referred to in sub-rule (3) of rule 11UE is incorrect or incomplete or not furnished, after giving an opportunity of being heard to the declarant.

(3) After the grant of certificate in Form No. 2, the conditions under sub-rule (2) of rule 11UE shall be fulfilled by the declarant and interested parties and an intimation to this effect shall be filed by the declarant in Form No. 3 within sixty days of the date of receipt of certificate in Form No. 2 under sub-rule (2) with the jurisdictional Principal Commissioner or Commissioner.

(4) The jurisdictional Principal Commissioner or Commissioner may, on an application made by the declarant, extend the period of sixty days under sub-rule (3) by a further period not exceeding sixty days.

(5) Where the intimation in Form No. 3 is filed after the period of sixty days under sub-rule (3) or further period extended under sub-rule (4), as the case may be, then, notwithstanding anything contained in any other provision of rule 11UE and this rule, such intimation in Form No. 3 shall be treated as invalid and the provisions of this rule shall apply as if such person had never furnished the intimation in Form No. 3.

(6) No intimation in Form No.3 under sub-rule (3) shall be required to be furnished by the declarant if the following conditions are satisfied, namely:-

(a) the declarant or any of the interested parties has not filed, with respect to all the relevant order or orders, any –

(i) appeal or application or petition or proceeding;

(ii) arbitration, conciliation or mediation and no notices have been given thereof; or

(iii) proceeding to enforce or pursue attachments in respect of any award, order or judgement or any other relief against the Republic of India or Indian affiliates; and

(b) where, with respect to the relevant order or orders, any-

(i) appeals or applications or petitions or proceeding;

(ii) arbitration, conciliation or mediation; or

(iii) proceeding to enforce or pursue attachments in respect of any award, order or judgement or any other relief against the Republic of India or Indian affiliates,

has been filed or notice thereof has been given by the declarant or any interested parties, the declarant and all such interested parties have irrevocably withdrawn all such appeals, applications, petitions, proceeding, arbitration, conciliation and mediation and no further appeal or application or petition or proceeding or arbitration or conciliation or mediation has been filed by the declarant or any such interested party against the Republic of India or any of the Indian Affiliates before the withdrawal of such arbitration, conciliation or mediation and evidence thereof has been furnished at the time of furnishing the undertaking in Form No. 1 referred to in sub-rule (1) of rule 11UE; and

(c) where with respect to the relevant order or orders, any,-

(i) appeals or applications or petitions or proceeding;

(ii) the arbitration, conciliation or mediation;

(iii) the proceeding to enforce or pursue attachments in respect of any award, order or judgement or any other relief against the Republic of India or Indian affiliates;

had been filed by the declarant or any of the interested parties and have been disposed of, no further appeal or application or petition or proceeding or arbitration or conciliation or mediation has been filed by the declarant or any such interested party against the Republic of India or any of the Indian Affiliates on or before the disposal of such arbitration, conciliation or mediation and evidence thereof has been furnished at the time of furnishing the undertaking in Form No. 1 referred to in sub-rule (1) of rule 11UE.

(7) After the receipt of intimation in Form No. 3 under sub-rule (3) or grant of certificate in Form No. 2 under sub-rule (2) in cases covered under sub-rule (6), the jurisdictional Principal Commissioner or Commissioner shall pass an order granting relief in Form No. 4 or decline to grant relief in accordance with the procedure specified in sub-rule (8).

(8) The jurisdictional Principal Commissioner or Commissioner may, after giving an opportunity of being heard to the declarant, decline to grant relief under sub-rule (7) where,-

(a) the declarant has not fulfilled any of the conditions stipulated under sub-rule (2) of rule 11UE;

(b) the intimation in Form No. 3 or any part thereof is incorrect or incomplete;

(c) the intimation in Form No. 3 has not been filed in a case other than that covered under sub-rule (6);

(d) any of the attachments provided in Form No. 3 is incorrect or incomplete or has not been furnished;

(e) any of the evidences required to be furnished along with Form No. 3 is incorrect or incomplete or has not been furnished; or

(f) the intimation in Form No. 3 submitted by the declarant is not duly authorised by all necessary corporate action, including but not limited to any board resolution or similar authorisation under applicable law or a copy of such board resolution or legal authorisation is incorrect or incomplete or not furnished by the declarant.

(9) The order granting the relief under sub-rule (7) or declining to grant relief under sub-rule (8) shall be passed,-

(a) within a period of thirty days from the date of receipt of Form No. 3 by the Principal Commissioner or Commissioner, in cases where intimation in Form 3 has been furnished to the Principal Commissioner or Commissioner under sub-rule (3),

(b) within thirty days of the issue of Form No. 2, in cases covered under sub-rule (6).

(10) No order rejecting the undertaking in Form No. 1 under clause (b) of sub-rule (2) or declining relief under clause sub-rule (8), shall be passed by the Principal Commissioner or Commissioner without the approval of the Chief Commissioner.

(11) For the purpose of rejecting the undertaking under clause (b) of sub-rule (2) or declining to grant relief under sub-rule (8), the Principal Commissioner or Commissioner shall intimate the reasons thereof to the declarant and give him an opportunity of submitting a renewed undertaking in Form No. 1 or renewed intimation in Form No. 3, as the case may be, within a further period not exceeding thirty days.

(12) Where the renewed undertaking or renewed intimation is not filed within such further period under sub-rule (11), then, notwithstanding anything contained in any other provision of the rule 11UE and this rule, such undertaking or intimation shall be treated as invalid and the provisions of this rule shall apply as if such person had never furnished the undertaking in Form No. 1 or intimation in Form No. 3, as the case may be.

(13) The extended period allowed under sub-rule (11) for submitting a renewed undertaking in Form No. 1 or a renewed intimation in Form No. 3 shall be excluded from,-

(a) the period of fifteen days under sub-rule (2) for granting a certificate in Form No. 2 or passing an order rejecting such undertaking, as the case may be, by the jurisdictional Principal Commissioner or Commissioner; or

(b) thirty days under clause (a) and (b) of sub-rule (9) for passing an order granting relief under sub-rule (7) or declining relief under sub-rule (8), as the case may be, by the jurisdictional Principal Commissioner or Commissioner.

(14) For the purposes of computing the period of limitation under sub-rules (2) or (9), where immediately after the exclusion of the period or extended period allowed to the declarant, the period of limitation available to the Principal Commissioner or Commissioner, for granting certificate or passing or issuing an order under sub-rules (2) or (9), is less than fifteen days, such remaining period shall be extended to fifteen days and the period of limitation under said sub-rules shall be deemed to be extended accordingly.

(15) The undertaking in Form No. 1 shall be deemed to have never been filed if the Principal Commissioner or Commissioner has passed an order rejecting the undertaking in Form No. 1 under clause (b) of sub-rule (2) or declined to grant relief to the declarant under sub-rule (8).

(16) The directions of the jurisdictional Principal Commissioner or Commissioner, in Form No. 4, shall be binding on the assessing officer who shall, –

(a) give effect to such directions and pass an order and issue the refund, if any, and revoke attachments, if any, within a period of fifteen days from the date of the receipt of such directions; and

(b) file an application to withdraw any appeal or application or petition or proceeding filed by any Income-tax Authority or intimate the concerned person, where appeals or applications or petitions or proceeding has been filed by any other person representing the Republic of India, with respect to the specified orders covered under Form No. 4, within sixty days from the date of receipt of such directions.

(17) Any dispute with respect to the undertaking or part of the undertaking or indemnity bond specified Forms prescribed under these rules or in respect of any direction or order issued thereunder shall be governed by the relevant Indian laws and be decided in accordance with the procedures specified under the Act, under the exclusive jurisdiction of the relevant income-tax authorities, tribunals or courts in India, as the case may be, which are empowered to decide disputes under the Act.

(18) The Form Nos. 1, 2, 3 and 4 of Appendix IV shall be the Forms for the purposes of this rule and rule 11UE.

Explanation: – For the purposes of this rule and rule 11UE, unless the context otherwise requires,-

(a) ‘declarant’ means the person in whose case a specified order has been passed or made, as the case may be;

(b) ‘Indian affiliate’ means any of departments, agencies, instrumentalities, public sector companies, and other entities of the Republic of India, owned or controlled, directly or indirectly, allegedly or in fact, by any thereof, as well as any officials, officers, directors, employees, attorneys, representatives, those providing financing, and agents of any of these persons, whether in India or in any other country or territory outside India;

(c) ‘interested party’ means the following, namely:-

(i) all the companies or entities in the entire chain of holding of the declarant till the ultimate holding company or entity;

(ii) any person to whom the declarant has transferred any of its claims under any award, judgment, or court order pertaining to the relevant orders or under the relevant orders or granted any rights;

(iii) any person other than the person mentioned in sub-clauses (i) and (ii), in whose favour any interest has been created or assigned by the declarant or under any law or rules made thereunder with respect to any of the relevant order; and

(iv) any person who has initiated any proceedings with respect to any of the relevant orders;

(d) ‘related party’ means affiliates, predecessors, successors, all the companies or entities in the entire chain of holding till the ultimate holding company or entity, subsidiaries (whether direct or indirect), assignees, agents, shareholders (present and future), owners, directors, officers, those providing financing, and employees of the declarant;

(e) ‘relevant order’ means any specified order passed or made in respect of income accruing or arising through or from the transfer of an asset or a capital asset situate in India in consequence of the transfer of a share or interest in a company or entity registered or incorporated outside India made before the 28th day of May, 2012, particulars whereof are provided in Part A of the Annexure to the undertaking in Form No. 1;

(f) ‘specified order’ means,

(i) an assessment or reassessment order under section 143, section 144, section 147 or section 153A or section 153C; or

(ii) an order passed for enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154; or

(iii) an order passed deeming a person to be an assessee in default under sub-section (1) of section 201; or

(iv) an order passed imposing a penalty under Chapter XXI or under section 221;

(g) “ultimate holding company or entity” means a company or an entity that has ultimate control of the declarant directly or indirectly and such company or entity is not itself controlled by, or is subsidiary of, any other company or entity.’.

3. In the principal rules, after Appendix III, the following shall be inserted, namely: -

Please refer to the attached file for full notification.