S. 45 : Capital gains-Crypto currency-Bitcoin-Virtual Digital Asset-Held for more than 3 years (Thirty six months)-Property of any kind-Taxable as capital gains-Not as income from other sources-Entitle to claim exemption under Section 54F of the Act-Finance Act, 2022 w.e.f. 01.04.2022, Section 2(47A) had been inserted thereby Virtual Digital Asset meaning was assigned and that included underlying assets Bitcoins-When there are two views are possible the view which is favorable to the assessee be considered. [S.2(14), 2(47),2(47A), 54F, 56(2)(x), 115BBH, 194S, Foreign Exchange Management Act, 1999. 2(h), 2(m), 2(q)].
The assessee is an individual who is a salaried employee has purchased Bitcoin (crypto currency) during financial year 2015-16 and sold it during financial year 2020-21. He invested sale consideration in the purchase of property. The assessee filed return declaring long-term capital gain on sale of Bitcoin and also claimed exemption under section 54F. The Assessing Officer held that the crypto currency is not a capital asset under section 2(14) and made it taxable under section 56 as the income from other sources. On appeal, the Commissioner (Appeals) held that Crypto Currency (Bitcoins) is not an asset as per section 2(14), hence, the transfer as per section 2(47) as Long-Term Capital Gain is not applicable. Accordingly affirmed the order of the Assessing Officer. On appeal the Tribunal held that the assesseee is not regularly dealing in purchase/sale of shares/ crypto currency .His intention was to hold for long term capital gain which was more evident from fact that assessee held crypto currency for more than 3 years . Finance Act, 2022 w.e.f. 01.04.2022, section 2(47A) had been inserted thereby Virtual Digital Asset meaning is assigned and that included underlying assets Bitcoins. Since crypto currency is specifically incorporated in statute as an asset, it means that even before 1-4-2022, crypto currency was an asset and gain on sale of crypto currency had to be taxed under head capital gain and not under head income from other sources. Accordingly, claim of deduction under section 54F is allowable to the assessee. Tribunal also held that when there are two views are possible the view which is favorable to the assessee be considered referred, CIT v. Vegetable Products Ltd (1973 ) 88 ITR 1992 (SC). [1973] Chief Commissioner of CGST v. Safari Retreats Pvt. Ltd. Civil Appeal No. 2948 of 2023 order dt. 03.10.2024 at page 32, para 25(d). (AY. 2021 -22) (ITA No. 1 of 2024 (Jodh ) dt. 28-11-2024 )
Raunaq Prakash Jain v. ITO (Jodhpur)(Trib.) www.itatonline .org.(2024), 169 taxmann.com 298 ( Jodhpur)(Trib.)