Bitcoin investment was funded from Infosys' salary income hence its non-speculative nature

Bitcoin investments before 2022 are capital assets Budget 2022 clarified Bitcoin is a capital asset which will be taxed not as a capital asset

The Income Tax Appellate Tribunal (ITAT), Jodhpur bench, has ruled that Bitcoin is a capital asset and gains made from its sale before the Budget 2022 are not taxable.

The assessee, an Infosys employee, had invested in Bitcoin and sold it in the relevant assessment year. The tax officer treated the gains as speculative income and taxed them accordingly.

However, the assessee approached the ITAT, arguing that the Bitcoin investment was made from his Infosys salary income and was not speculative in nature. The assessee also claimed that since Bitcoin was not specifically defined as an asset in the Income Tax Act, it should be considered a capital asset by default.

The ITAT agreed with the assessee's arguments and held that Bitcoin is a capital asset and gains made from its sale before Budget 2022 are not taxable. The tribunal also observed that Budget 2022 has clarified that Bitcoin is a capital asset and will be taxed not as a capital asset.

Further, the assessee had also invested the gains from Bitcoin in the purchase of a house and claimed tax exemption under section 54F. The tax officer disallowed the exemption, arguing that Bitcoin is not a specified asset under section 54F.

However, the ITAT once again agreed with the assessee and held that gains from Bitcoin can be reinvested to purchase a house and claim tax exemption under section 54F. The tribunal noted that since Bitcoin is a capital asset, gains made from its sale are eligible for tax exemption under section 54F.

This Bitcoin judgment by the Jodhpur ITAT is significant as it provides valuable legal takeaways and serves as a reference for future cases involving Bitcoin taxation. It also highlights the importance of specific provisions in the Income Tax Act for different types of assets and investments.

Key legal takeaways from this Bitcoin judgement by Jodhpur ITAT:

ITAT rulings serve as reference for future cases involving Bitcoin taxation

Section 54F tax exemption can be claimed on the sale of Bitcoin before April 1, 2022

Bitcoin is a property for taxation purposes