Prior permission under section 281 of Income Tax Act, 1961 to create a charge on assets of business - CBDT Guidelines
CBDT has issued guidelines for granting of prior permission u/s 281 of the I.T. Act, 1961 to transfer or create a charge on the assets of the assessee.
++ The taxpayers should apply in the prescribed form which would be available on the departmental website as well as with the Assessing Officers.
++ The taxpayer would have to file the form at least thirty days before the proposed date of transaction.
++ The circumstances under which prior permission u/s 281 should be granted by the Assessing Officers are as follows:
i) If there is no demand outstanding and there is no likelihood of demand arising in the next six months, then the permission should be granted.
ii) If undisputed demand is outstanding and there is no likelihood of demand arising in next 6 months, then the tax payer should pay the same along with interest due thereon and then permission should be granted.
iii) If there is disputed demand outstanding, then the tax payer should obtain stay for the same and indemnify the outstanding demand by way of bank guarantee or sufficient assets or by Department retaining the first charge on the assets proposed to be transferred or on which such charge is being created, to the extent of such demand. Thereafter, the permission u/s 281 would be granted by the A.O.
iv) If demand is likely to arise in the next six month, then the A.O. should explore the possibility of action prescribed u/s 281B.
++ There would be only one level of intervention i.e. at the level of the range head for granting permission.
++ The validity of the letter granting permission u/s 281 would be:
i) One hundred and eighty days from the date of issue of approval, or
ii) Service of order of attachment u/s 281B whichever is earlier.
++ Once the asset is transferred or charge is created, the taxpayer should submit the documents, in this regard, to the A.O. for his record.
CBDT Circular No. 04/2011, Dated: July 19, 2011