Mumbai Tribunal Upholds Interest Deduction on Borrowings for Overseas Acquisition

 Mumbai Tribunal has deleted the interest disallowance in respect of borrowed funds deployed for the acquisition of an overseas company through step-down wholly owned subsidiaries, holding that the interest expenditure claimed as a deduction under Section 36(1)(iii) of the Income-tax Act, 1961 (‘the Act’)was incurred wholly and exclusively for the purposes of business and was therefore fully allowable.

Mumbai Tribunal Allows Loss due to Fair Valuation under Mark-To-Market Principle on Market-Linked Debentures as Business Deduction

The Mumbai Bench of the Income Tax Appellate Tribunal (‘Tribunal’) held that loss arising on fair valuation of Benchmark Linked Debentures (BLDs), market linked securities, cannot be disallowed merely because it represents a mark-to-market adjustment. The Tribunal observed that where financial instruments are valued in accordance with recognised accounting standards and the method is consistently applied, the resulting loss represents a legitimate business loss and cannot be treated as merely notional.

Background

Section 122(1A) penalty not imposable on employees

Facts: The adjudicating authority held that the Company wrongfully availed and passed ITC by issuing fake invoices. The authority also imposed personal penalty under Section 122(1A) of the CGST Act on Petitioners (CFO, CEO and Joint MD of the Company).

Modified Return under Section 170A Must Be Considered in Pending Assessment

 Introduction: A Landmark Ruling for Tax Certainty

In a significant and taxpayer-friendly ruling, the Hon’ble Bombay High Court in Bajaj Electricals Ltd. vs. ACIT has clarified an important issue relating to modified returns filed after business reorganization (such as amalgamation or demerger) under section 170A of the Income-tax Act (‘the Act’). The core issue before the Hon’ble High Court was whether, in a case where assessment proceedings were pending on the date of filing of a modified return pursuant to a business reorganization, the Assessing Officer (AO) could initiate a fresh scrutiny of the modified return after passing the assessment order.

ITAT Mumbai Provides Safe Harbor for Convertible Instruments: Conversion Not Taxable Under Section 56(2)(x)

 In a ruling that brings significant relief to foreign portfolio investors and venture capital firms, the Income Tax Appellate Tribunal (ITAT) in Mumbai has clarified that the conversion of optionally convertible preference shares into equity shares does not trigger taxation under the income from other sources.

Not all payments made by Company on behalf of the promoter shareholder to be treated as 'deemed dividend' under Income Tax Act

 The Ahmedabad Bench of ITAT has ruled that a payment made by a closely-held company on behalf of a shareholder, by debiting his existing credit balance in a deposit account maintained with the company, does not constitute “deemed dividend”, as no money flowed from the company to the shareholder.

 

TAX DUE DATE - MARCH 2026.

Sr No	Due Date	Related to	Compliance to be made
1	11.03.2026	GST	Filing of GSTR 1 for the month of February, 2026

2

20.03.2026

GST

Payment of GST for the month of February, 2026 Filing of GSTR 3B for the month of February, 2026

3	07.03.2026	TDS/TCS (Income Tax)	· Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of February 2026 · Deposit TDS from Salaries deducted during the month of February 2026 • Deposit TCS for collections made under section 206C including sale of scrap during the month of February 2026, if any
4	15.03.2026	Income Tax	Payment of Advance Tax
5	31.03.2026	GST LUT	Filing of LUT for the FY 25-26

Appellate Authority allows payment of incremental tax liability without interest w.r.t issuance of debit notes due to price escalation

 This Tax Alert summarizes a recent order passed by the Commissioner CGST (Appeals) , being the First Appellate Authority, regarding the applicability of interest on differential tax pursuant to issuance of debit notes for upward revision of price.

The key observations of the Commissioner (Appeals) are:

ITC on Autopilot? The Hidden Risks of Real-Time GST Reconciliation

 Let’s start with a small story in this regard...

Client B runs a mid-sized manufacturing unit. Every month, his finance team proudly informs CA X that their Input Tax Credit (ITC) reconciliation is “fully automated.” They use a cloud-based tool that pulls GSTR-2B data, matches invoices, and generates exception reports.

TDS RATE FOR FY 2026-27.

 Given below the TDS rate for FY 2026-27 under Income Tax act 2025.

 

1. TDS Rate

A.  Section 392: Salary & Employee balances TDS on Payment of salary

 

Sec 392 (1) For Computation of TDS on salary slab rate is in force remain as in old act Section 192 TDS on Accumulated PF Balance due on Employee

 

Sec 392 (7) Rate of 10 % remain same For Computation of TDS on Accumulated Balance PF

Returning to India: A Guide to Tax Residency and Global Income Compliance

 For Non-Resident Indians (NRIs) planning to move back home, the relocation is only half the journey. The other half is understanding how their tax liability in India will shift the moment their residential status changes. With the financial year ending soon, now is the time to plan.

Section 58 of the Income Tax Act, 2025: A Unified Presumptive Taxation Regime for Small Taxpayers

 The newly enacted Income Tax Act, 2025, marks a significant step toward simplification by consolidating multiple presumptive taxation schemes into a single, streamlined framework. Section 58 of the new Act merges the provisions previously found in sections 44AD, 44ADA, and 44AE of the 1961 Act, creating a uniform regime for small businesses, professionals, and transport operators.

Decoding the New Foreign Tax Credit Regime: Income Tax Act, 2025 & Draft Rules, 2026

 The landscape of international taxation in India is set for a significant shift with the introduction of the Income Tax Act, 2025, effective from April 1, 2026. The new framework, along with the Draft Income Tax Rules, 2026, brings greater clarity and structure to the mechanism of claiming Foreign Tax Credit (FTC). This article breaks down the key provisions governing FTC under the new regime.

The new Act bifurcates the relief mechanism into two distinct categories: relief under tax treaties (Section 159) and unilateral relief (Section 160). The procedural backbone for these claims is detailed in Rule 76 of the Draft Rules.