Tax News Daily
The latest tax news from around the world, summarised and tagged for tax professionals. Updated twice daily.
Tax Head
Region
ITAT Quashes Reassessment Based Solely on Pre-2021 Third-Party Search Material
India's ITAT has quashed a reassessment proceeding that was initiated solely on the basis of third-party search material predating the 2021 amendments to the Income Tax Act. The tribunal ruled that reassessment cannot be validly triggered using pre-2021 search material under the new reassessment framework introduced by the Finance Act 2021. The decision highlights critical procedural and temporal limitations on the tax department's power to reopen assessments, reinforcing taxpayer protections against reassessments that rely on stale or procedurally incompatible information gathered under the old statutory regime.
ITAT: Assessment Quashed as AO Exceeded Scope of Limited Scrutiny Without Mandatory Approval
India's ITAT has quashed an assessment order where the Assessing Officer exceeded the permissible scope of a limited scrutiny without obtaining mandatory prior approval from higher authorities. The tribunal held that limited scrutiny cases are restricted to the specific issues for which the case was selected, and any expansion of scope requires explicit approval under prescribed procedures. By acting beyond this boundary without authorization, the AO rendered the assessment invalid. The ruling underscores procedural safeguards that protect taxpayers from arbitrary or unauthorized expansion of tax scrutiny beyond its originally sanctioned parameters.
ITAT Quashes Reassessment Notice Issued After 31 March 2022 for AY 2015-16 as Time-Barred
India's ITAT has quashed a reassessment notice issued after 31 March 2022 for Assessment Year 2015-16, ruling it time-barred under the amended reassessment provisions of the Income Tax Act. The tribunal applied the Supreme Court's guidance on the transitional provisions introduced by the Finance Act 2021, finding that the extended timelines allowed under pandemic-related relaxations did not permit reassessment notices for AY 2015-16 to be issued beyond the stipulated cutoff date. The decision provides important clarity on the temporal limits of reassessment jurisdiction under the post-2021 statutory framework.
ITAT Allows Deduction of Interest on Delayed Radio Migration Fees, Grants Depreciation on Acquired Workforce Intangibles
India's ITAT has allowed a taxpayer's deduction for interest paid on delayed radio migration fees, treating it as a revenue expenditure deductible under the Income Tax Act. Additionally, the tribunal granted depreciation on workforce intangibles acquired as part of a business acquisition, recognizing them as qualifying assets under the depreciation provisions. The rulings address nuanced questions around the deductibility of financing costs linked to regulatory fees and the tax treatment of intangible assets such as assembled workforces, providing useful precedent for businesses involved in telecom operations and corporate acquisitions in India.
ITAT Deletes Section 14A Disallowance for Failure to Record Mandatory Satisfaction Before Invoking Rule 8D
India's ITAT deleted a disallowance made under Section 14A of the Income Tax Act, which relates to expenditure incurred to earn exempt income. The tribunal found that the AO failed to record mandatory satisfaction that the taxpayer's own disallowance was incorrect before invoking Rule 8D for computing disallowance. This decision reinforces the settled legal position that mechanical application of Rule 8D without the AO first recording dissatisfaction with the assessee's computation is procedurally invalid and renders the disallowance unsustainable.
Section 234C’s Hidden Cushion: The Lesser-Known 12% and 36% Advance Tax Rule
This article examines Section 234C of India's Income Tax Act, focusing on a lesser-known provision that reduces the standard 3% monthly interest rate on advance tax shortfalls to 1% (annualized 12%) or 3% (annualized 36%) under specific circumstances. The piece explains the cushion available to taxpayers who meet certain installment thresholds, helping them avoid full interest liability. It clarifies how the advance tax installment schedule interacts with these reduced rates, offering practical guidance for individual and corporate taxpayers seeking to minimize interest penalties on underpayment of advance tax during the financial year.
Mumbai ITAT Restricts Addition on Alleged Bogus Diamond Purchases to 2% Following Earlier Orders in Assessee’s Own Case
The Mumbai Income Tax Appellate Tribunal (ITAT) restricted the tax addition on alleged bogus diamond purchases to 2% of the purchase value, following precedent set in earlier orders in the assessee's own case. The tribunal applied consistency principles, recognizing that the same issue had been adjudicated previously and limiting the addition accordingly. This decision is significant for the diamond trade industry in India, where bogus purchase additions are a recurring audit issue, and reinforces the principle that tax authorities must follow prior rulings in the assessee's own case when facts remain unchanged.
Mumbai ITAT: Typographical Error in Tax Audit Report Cannot Deny PF Deduction if Contribution Was Actually Paid Within Due Date
The Mumbai ITAT ruled that a typographical error in a tax audit report cannot be used to deny a deduction for provident fund (PF) contributions if the actual payment was made within the statutory due date. The tribunal held that the substance of the transaction—timely payment—should prevail over a clerical error in the audit report. This decision protects taxpayers from losing legitimate deductions due to minor documentation errors and underscores that tax authorities must look at actual facts rather than relying on technical defects in reporting documents.
Mumbai ITAT Allows 60% Depreciation on Computer Software and Restricts Section 14A Disallowance to Assessee’s Suo Motu Computation
The Mumbai ITAT allowed 60% depreciation on computer software, affirming its classification as eligible for the higher depreciation rate applicable to computers and software under Indian tax law. Additionally, the tribunal restricted the Section 14A disallowance—which limits deductions for expenses related to exempt income—to the assessee's own suo motu computation, rejecting the tax officer's higher disallowance. Both rulings favor the taxpayer and reinforce limits on revenue authorities' discretion to override assessee computations without adequate basis.
Bangalore ITAT Deletes ₹10 Lakh Addition Caused by DRP’s Typographical Error- AO Cannot Sustain Addition Contrary to DRP’s Intent
The Bangalore ITAT deleted a ₹10 lakh tax addition that arose from a typographical error made by the Dispute Resolution Panel (DRP). The tribunal held that the Assessing Officer (AO) cannot sustain an addition that is contrary to the actual intent of the DRP's directions, even if the written order contained an error. The ruling reinforces that AOs are bound by the substance and intent of DRP directions rather than literal but erroneous text, protecting taxpayers from arbitrary additions stemming from administrative mistakes in quasi-judicial proceedings.
Report Suggests 40% of Workers Have Used AI to Make Fake Expense Receipts
A report reveals that approximately 40% of workers have used AI tools to fabricate fake expense receipts, raising significant concerns for corporate expense management and tax compliance. Fraudulent receipts submitted for reimbursement can distort business expense deductions, creating potential corporate tax liability issues and audit exposure. The trend highlights a growing intersection of AI-enabled fraud and tax integrity, with implications for internal controls, payroll expense reporting, and HMRC/IRS compliance. Companies and tax authorities may need to adopt AI-detection countermeasures and tighten expense documentation standards to safeguard against inflated deductions and fraudulent claims.
Three Questions to Ask About New Tax Transparency Regimes
This article examines emerging tax transparency regimes requiring companies to publicly disclose tax information, posing three critical questions organizations should consider when navigating these new mandates. As governments worldwide push for greater corporate tax disclosure, businesses must evaluate what information is being required, how it will be interpreted by the public and policymakers, and whether disclosures accurately reflect economic reality. The piece highlights the complexity of tax transparency rules, the risk of misinterpretation of disclosed data, and the broader implications for multinational companies managing reputational and compliance risks under evolving global tax reporting frameworks.
The Importance of Separating Business and Personal Expenses
This article emphasizes the critical importance of keeping business and personal expenses separate for tax and accounting purposes. Mixing expenses can trigger IRS scrutiny, complicate tax filings, and potentially disqualify legitimate business deductions. The article advises maintaining dedicated business bank accounts and credit cards, keeping detailed records, and working with accountants to ensure proper expense categorization. Failure to separate expenses can lead to audit risks, loss of deductions, and legal liability issues, particularly for sole proprietors and small business owners who may blur the line between personal and business finances.
European Commission Launches DAC Recast: Consolidating a Decade of Tax Transparency Rules into One Single Legal Framework
The European Commission has launched a recast of the Directive on Administrative Cooperation (DAC), consolidating over a decade of incremental tax transparency amendments into a single unified legal framework. The recast streamlines DAC1 through DAC8 into one coherent instrument, improving clarity and consistency across automatic exchange of information rules covering financial accounts, tax rulings, country-by-country reporting, and digital platform data. The initiative aims to reduce complexity for member states and enhance enforcement of cross-border tax transparency obligations across the EU.
Webinar: The First Anniversary of OB3: Examining Implementation and the Impact of the 2025 Tax Bill – July 23, 2026
A webinar hosted by the National Tax Association marking the first anniversary of OB3 (One Big Beautiful Bill), examining its implementation and the impact of the 2025 Tax Bill. The session, scheduled for July 23, 2026, will analyze how the landmark US tax legislation has been applied in practice since enactment, reviewing regulatory guidance, compliance challenges, and broader economic effects. The 2025 Tax Bill represents significant changes to the US tax code, and this anniversary review provides practitioners, academics, and policymakers an opportunity to assess real-world outcomes against legislative intent.
DMA Acquires Barron Corporate Tax Solutions in Illinois
DMA, a property tax and business tax consulting firm, has acquired Barron Corporate Tax Solutions, an Illinois-based corporate tax advisory practice. The acquisition expands DMA's corporate tax capabilities and geographic footprint in the Midwest. Barron Corporate Tax Solutions specializes in corporate income tax compliance and consulting services. The deal strengthens DMA's ability to serve mid-to-large enterprises seeking integrated tax solutions across property, sales, and corporate income tax disciplines. Financial terms of the transaction were not disclosed.
Why Interest on Foreign Tax Arrears is Not Deductible: Canadian Tax Lawyer Explains Tax Court Decision in Bank of Montreal v. The King, Paragraph 18(1)(a)
A Canadian Tax Court decision in Bank of Montreal v. The King examined whether interest on foreign tax arrears is deductible under paragraph 18(1)(a) of Canada's Income Tax Act. The court ruled such interest is not deductible, as it fails the income-earning purpose test — the expense must be incurred for the purpose of earning income from a business or property. The case clarifies that interest payments on foreign tax obligations are considered on capital or non-income account, reinforcing important limitations on corporate deductions for Canadian taxpayers with cross-border operations and foreign tax liabilities.
Govt abolished Super Tax for major export-oriented companies
The Pakistani government has abolished the Super Tax for major export-oriented companies, a significant policy shift aimed at boosting the country's export sector competitiveness. The Super Tax, which had been levied on large corporations, was seen as a burden on export-driven industries. By removing this additional tax layer, the government signals its intent to incentivize export growth and improve the business environment for key industrial sectors. This move is expected to reduce the overall corporate tax burden on qualifying companies and may influence foreign investment decisions in Pakistan's export-oriented manufacturing and services industries.
ITAT Rejects Section 56(2)(viib) Addition as Shares Were Issued to Holding Company
The Income Tax Appellate Tribunal (ITAT) rejected a tax addition made under Section 56(2)(viib) of the Indian Income Tax Act, which targets share issuances above fair market value. The tribunal held that the provision does not apply when shares are issued to a holding company, as the relationship between a subsidiary and its holding company falls outside the scope of the angel tax provision. This ruling clarifies the exemption boundary for intra-group share issuances within corporate structures, providing relief for companies receiving investment from parent entities.
ITAT Deletes Section 56(2)(viib) Addition as Shares Were Allotted to Existing Shareholders
The Income Tax Appellate Tribunal (ITAT) deleted a Section 56(2)(viib) addition — the Indian angel tax provision targeting share issuances above fair market value — on the grounds that shares were allotted to existing shareholders rather than new investors. The tribunal found that allotments to existing shareholders do not attract the angel tax provisions, as the legislative intent targets fresh external capital infusions. This decision reinforces the principle that rights issues or similar allotments to current shareholders remain outside the ambit of Section 56(2)(viib).
Get the Friday Digest
Every Friday, a curated summary of the week's tax news delivered to your inbox. Choose what you want to hear about — no noise, no spam, unsubscribe anytime.
Tax heads you care about(select all that apply)
Regions you care about(select all that apply)
Your email is never shared or sold. You can unsubscribe at any time. Built in compliance with GDPR.