Tax News Daily
The latest tax news from around the world, summarised and tagged for tax professionals. Updated twice daily.
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Sold Multiple Houses in the Same Year? ITAT Bangalore Rules Section 54 Exemption Is Available for Each House Separately
The ITAT Bangalore has ruled that the Section 54 capital gains exemption on reinvestment in residential property is available separately for each house sold in the same financial year. The tribunal rejected a restrictive interpretation that would limit the exemption to a single transaction per year, holding that each qualifying sale and reinvestment should be assessed independently. This taxpayer-friendly ruling clarifies that individuals selling multiple residential properties in one year can claim the Section 54 exemption on each transaction, provided reinvestment conditions are met for each.
Andhra Pradesh Inaugurates Two New GSTAT Benches to Hear GST Appeals
Andhra Pradesh has inaugurated two new benches of the GST Appellate Tribunal (GSTAT) to handle the growing backlog of GST-related appeals in the state. The establishment of these benches marks a significant development in India's GST dispute resolution infrastructure, providing taxpayers in Andhra Pradesh with a formal appellate forum closer to home. The new GSTAT benches are expected to expedite resolution of pending GST disputes, reducing litigation timelines and offering businesses a structured mechanism to challenge GST assessment orders and other tax authority decisions.
The Five Stages of Tax Disputes: From Audit to Resolution
This KPMG article outlines a five-stage framework for managing tax disputes involving multinational organizations, covering the full lifecycle from initial audit through appeals, litigation, and settlement. It provides guidance for tax leaders on how to navigate interactions with global tax authorities at each stage, emphasizing proactive risk management, documentation, and strategic decision-making. The article addresses how multinationals can effectively respond to audit findings, engage in administrative appeals, pursue litigation where necessary, and reach negotiated resolutions, helping organizations minimize exposure and manage reputational and financial risks associated with cross-border tax controversies.
2025 Transfer Pricing Year in Review
KPMG's 2025 Transfer Pricing Year in Review examines how multinational enterprises are navigating a rapidly evolving global transfer pricing landscape shaped by digital disruption and regulatory change. The report covers key developments including the continuing implementation of OECD Pillar Two rules, increased scrutiny from tax authorities worldwide, evolving documentation requirements, and the growing use of data and technology in transfer pricing audits. It highlights trends in advance pricing agreements, dispute resolution mechanisms, and the impact of geopolitical shifts on intercompany pricing strategies. The review serves as a comprehensive reference for tax professionals managing cross-border related-party transactions in an increasingly complex environment.
Gauhati HC: ITC Can’t Be Refused to Bona Fide Purchaser for Seller’s Failure to File GST Returns
The Gauhati High Court ruled that input tax credit (ITC) cannot be denied to a bona fide purchaser solely because the seller failed to file GST returns. The court held that a genuine buyer who has completed a legitimate transaction should not bear the tax burden arising from the seller's non-compliance. This ruling reinforces protections for honest taxpayers under India's GST framework and has significant implications for businesses facing ITC reversals due to supplier defaults, clarifying that tax authorities must establish the purchaser's knowledge or involvement in the seller's non-compliance before denying credit.
Wrong Income Tax Officer? Entire Reassessment Can Be Quashed – Why Your Returned Income Decides Your Jurisdiction
An Indian tax ruling clarifies that jurisdiction for income tax reassessment is determined by the taxpayer's returned income, not assessed income. If reassessment proceedings are initiated by an officer who lacks jurisdiction based on the returned income threshold, the entire reassessment can be quashed as void. This has significant practical implications for taxpayers facing reassessment notices, as a jurisdictional defect constitutes a fundamental procedural flaw. Taxpayers can challenge reassessments on this ground, potentially nullifying the entire proceeding regardless of the merits of the underlying tax demand.
Can You Claim Section 54 Exemption for Multiple Floors in One Redeveloped Building? ITAT Mumbai Gives a Big Relief
The Income Tax Appellate Tribunal (ITAT) Mumbai has ruled that a taxpayer can claim Section 54 capital gains exemption for multiple residential floors within a single redeveloped building. The tribunal held that each floor qualifying as an independent residential unit can be treated as a separate property for exemption purposes. This decision provides significant relief to taxpayers involved in property redevelopment transactions, particularly in urban areas where vertical redevelopment is common. The ruling broadens the interpretation of Section 54 exemption eligibility, potentially benefiting many property owners in similar redevelopment scenarios.
Supreme Court: Section 74 Cannot Be Invoked Without Proof of Fraud or Fake ITC
India's Supreme Court ruled that Section 74 of the GST Act, which deals with tax evasion through fraud or suppression of facts, cannot be invoked without concrete proof of fraud or use of fake input tax credit. The judgment establishes that tax authorities must demonstrate clear evidence of fraudulent intent before applying the stricter provisions and extended limitation periods under Section 74. This decision limits the scope of the provision and protects taxpayers from arbitrary invocation of fraud-related penalties, setting an important precedent for GST enforcement and litigation across India.
Tennessee Farmer Tried to Return $20,000 to IRS. Years Later, He’s Still Fighting
A Tennessee farmer received a $20,000 IRS payment he believed was an error and attempted to return the funds, only to become entangled in a prolonged dispute with the agency. The case highlights serious procedural and administrative failures within the IRS, raising questions about taxpayer rights, IRS error resolution processes, and the difficulties individuals face when trying to correct government mistakes. The ongoing controversy illustrates broader concerns about IRS responsiveness and the burden placed on ordinary taxpayers navigating complex federal tax administration, even when acting in good faith to comply with their obligations.
Author Trust Royalties Are Capital, Not Income, UK Court Says
A UK court has ruled that royalties received by an author's trust are capital in nature rather than income, a significant tax classification decision. The distinction matters because capital receipts and income receipts are taxed under different regimes in the UK, with capital gains tax treatment potentially more favourable than income tax. The ruling has implications for authors, estates, and trusts that receive royalty streams, potentially affecting how such payments are structured and reported. Practitioners advising creative industry clients on trust and estate planning will need to consider this judgment when assessing the tax treatment of ongoing royalty arrangements.
Tax Court of Canada says CRA Cannot Use ‘Fairness’ Reassessment to Immunize a Tax Increase from Appeal: A Canadian Tax Lawyer Analyzes Forrest v The King
The Tax Court of Canada ruled in Forrest v The King that the CRA cannot use a 'fairness' reassessment as a mechanism to increase taxes while simultaneously shielding that increase from taxpayer appeal. A Canadian tax lawyer analyzes the decision, highlighting that the CRA's attempt to invoke taxpayer relief provisions to issue a reassessment that raised taxes—then argue the increase was immune from appeal—was rejected. The court affirmed that taxpayers retain full appeal rights against any tax increase, regardless of the procedural route used by the CRA to issue the reassessment.
Owner Of Dissolved UK Biz Allowed To Fight Capital Gains Tax
A UK tribunal has permitted the owner of a dissolved UK business to contest a capital gains tax assessment, despite the company's dissolution. The case raises procedural and substantive questions about the ability of former shareholders or directors to challenge tax liabilities arising from a company that no longer legally exists. The ruling is relevant for practitioners handling tax disputes involving dissolved entities, including questions of standing, time limits, and liability attribution. It highlights the importance of understanding how HMRC pursues capital gains assessments in post-dissolution scenarios and the rights of individuals connected to dissolved businesses.
Digital Asset Industry Group Sues to Block Illinois’ First-in-the-Nation Crypto Tax
A digital asset industry group has filed a lawsuit seeking to block Illinois from enforcing what is described as the first-of-its-kind cryptocurrency tax in the United States. The legal challenge targets Illinois' novel tax on crypto transactions, arguing it is unconstitutional or otherwise legally defective. The case represents a significant tax controversy with broad implications for how U.S. states may tax digital assets. A successful challenge could deter similar legislation in other states, while a defeat could open the door to widespread state-level crypto taxation beyond existing capital gains frameworks.
Bad Debts and “Pass-Through” Items – Proof and Invoicing Matter
This article examines VAT treatment of bad debts and pass-through items, highlighting that proper documentation and invoicing are critical for businesses seeking VAT relief or recovery. It explores the evidentiary requirements tax authorities impose when a supplier claims a bad debt VAT adjustment, and clarifies how pass-through costs must be invoiced to preserve correct VAT treatment. Errors in invoicing methodology or insufficient proof can result in denied VAT recovery or unexpected VAT liabilities, making procedural compliance as important as substantive entitlement.
Can Income Tax Additions Be Made Solely on Third-Party Evidence? ITAT Mumbai Says No – A Landmark Judgment Every Taxpayer Must Know
The Income Tax Appellate Tribunal (ITAT) Mumbai has issued a significant ruling clarifying that tax additions cannot be made solely on the basis of third-party evidence without giving the taxpayer an opportunity to cross-examine the source. The judgment reinforces principles of natural justice in Indian tax proceedings, establishing that assessments must be supported by corroborating evidence beyond unverified third-party statements. This landmark decision has broad implications for taxpayers facing scrutiny assessments, limiting the ability of tax authorities to rely exclusively on external evidence when making income additions without proper procedural safeguards.
Partner’s Remuneration Under Section 44ADA: Delhi ITAT Opens the Door, But Is the Debate Really Over?
The Delhi Income Tax Appellate Tribunal has ruled on the deductibility of partner remuneration under Section 44ADA of India's Income Tax Act, which governs presumptive taxation for professionals. The ruling addresses whether a firm can claim partner remuneration as a deduction when its professional income is assessed under the presumptive taxation scheme. While the ITAT has opened the door to allowing such deductions, the article highlights that the legal debate remains unresolved, with conflicting interpretations still possible. This has significant implications for professional partnerships in India operating under the presumptive tax regime.
EU Excise Duty Law: Key Rulings on Direct Delivery, Security Deposits, and Formal Requirements
A series of EU Court of Justice rulings has clarified key aspects of excise duty law, addressing direct delivery arrangements, security deposit requirements, and formal compliance obligations under the EU Excise Duty Directive. The rulings provide important guidance for businesses moving excise goods across EU member states, particularly regarding when and how tax obligations arise, the validity of security guarantees, and the consequences of non-compliance with formal procedural requirements. These decisions have direct implications for manufacturers, importers, and logistics operators managing excise duty suspended movements within the EU single market.
Bloomberg: Amgen Settles Investor Suit Over Tax Liability for $74 Million
Amgen has settled an investor lawsuit for $74 million related to disclosures about its tax liabilities. The case centered on allegations that the biopharmaceutical company misled shareholders regarding the extent of its tax exposure, particularly concerning transfer pricing disputes with the IRS. The settlement highlights the intersection of tax controversy and securities litigation, where large corporate tax positions can carry significant investor disclosure obligations. This case is notable for practitioners advising on tax risk disclosure and the potential downstream liability when transfer pricing or other tax disputes materialize into material financial exposures for publicly traded companies.
Delhi HC Declines Plea Against 18% Tax on Diagnostic Services, Directs Matter to GST AAR
The Delhi High Court has declined to entertain a petition challenging the 18% GST levy on diagnostic services, instead directing the petitioner to approach the GST Authority for Advance Rulings (AAR). The court's decision channels the dispute through the prescribed statutory mechanism rather than allowing direct judicial intervention. This ruling is significant for the diagnostics and healthcare sector, where providers have contested the GST classification and applicable tax rates on their services. Practitioners advising healthcare clients should note that AAR remains the appropriate first forum for resolving GST rate classification disputes before escalating to higher courts.
Punjab & Haryana HC Invalidates GST Show Cause Notice Prepared Using AI Tool
The Punjab & Haryana High Court has invalidated a GST show cause notice on the grounds that it was generated using an AI tool without adequate human review, raising significant concerns about the use of automated systems in tax enforcement proceedings. The ruling has important implications for tax authorities and practitioners, signalling that AI-drafted notices must meet standards of proper application of mind. This decision sits at the intersection of tax controversy and tax technology, potentially reshaping how GST enforcement notices are issued across India.
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