Cryptocurrency taxable as Capital Gain and eligible for exemption U/s 54F: Jodhpur ITAT
Here is an interesting case on capital gain exemption on crypt transfer
The case details is as under:
Raunaq Prakash Jain vs. Income Tax Officer (Ward-1), Bhilwara [Jodhpur ITAT]
Let us have a Short Overview of the case:
The issue was regarding cryptocurrency taxation wherein Raunaq Prakash Jain contested the tax treatment of a substantial gain accrued from the sale of Bitcoin.
The crux of the dispute for the AY 2021-22 was whether this gain of INR 6crs should be taxed under the head of capital gains or as income from other sources. Further, the assessee sought to avail the benefit of deduction under section 54F for reinvestment in residential property.
Analysis:
ITAT embarked on a thorough examination of the legal definitions within the Income Tax Act, particularly “capital asset” as defined in section 2(14).
The deliberation extended to the interpretation of “property” and its inclusivity of rights and interests, which could potentially encompass digital assets like Bitcoin.
FA 2022 is prospective: The bench also deliberated on the prospective implications of the Finance Act 2022, which introduced a new framework for the taxation of virtual digital assets (VDAs) effective from AY 2023-24.
Decision by Tribunal:
ITAT ruled in FAVOR of the ASSESSEE. The tribunal determined that the gains from the sale of Bitcoin fall squarely within the ambit of capital gains, paving the way for the assessee to claim the contested deduction under section 54F. This acknowledgment of cryptocurrency as a capital asset for the period preceding AY 2022-23 is a notable development.
Conclusion:
The tribunal’s ruling not only provides relief to Raunaq Prakash Jain but also serves as a guiding light for numerous taxpayers navigating the complexities of cryptocurrency transactions. Lets see for more judgements/litigation on this issue.
The copy of the order is as under:
