#Capital Gains Tax

The ITAT Delhi has held that an Assessing Officer cannot substitute a registered valuer’s report with an arbitrary, unsupported methodology to compute indexed cost of acquisition under Section 48. This reinforces the legal primacy of expert valuation in capital gains assessments and protects taxpayers from speculative adjustments by revenue authorities.

The ITAT Bangalore has ruled that capital gains from the sale of multiple residential properties qualify for Section 54 exemption on a per-property basis, allowing taxpayers to reinvest gains from each sold flat into separate residential purchases without being capped at one house. This clarifies a long-standing ambiguity and benefits high-net-worth individuals and real estate investors who liquidate multiple units in a single financial year.

ITAT Ahmedabad rules that reassessment notices u/s 148 issued beyond the limitation period for escaped income below ₹50 lakh are invalid, setting aside the assessment order and remanding the case for fresh consideration. The tribunal emphasized procedural fairness, requiring the AO to provide recorded reasons and allow the assessee to substantiate capital gains computation.

The ITAT Bangalore has ruled that when an assessee provides credible documentary proof of actual payment - such as society certificates and payment receipts - the lower sale deed value cannot be used to compute capital gains. This sets a critical precedent for property buyers in cooperative housing societies, ensuring tax liability reflects true economic cost, not artificially understated deed values.

ITAT Ahmedabad rules that capital gains tax under Section 2(47)(v) of the Income-tax Act crystallizes upon registration of the sale deed, irrespective of delayed payment or retention of possession. The ruling clarifies that the transfer date for tax purposes is the registration date, impacting taxpayers and advisors on timing of tax liability recognition.

ITAT Delhi rules that unrecorded cash ('on money') received in property transactions forms part of the sale consideration and must be taxed under Capital Gains, not Section 69A of the Income Tax Act. The ruling clarifies the tax treatment of informal payments in real estate deals, impacting taxpayers and tax authorities alike.

The ITAT Bangalore has ruled that for Joint Development Agreements executed before April 1, 2018, capital gains arise in the year the land is transferred to the developer-not when the occupancy certificate is issued. This clarifies a long-standing ambiguity for developers and landowners, ensuring tax liability aligns with the actual transfer of control, not delayed completion milestones.

ITAT Delhi rules that under the India-UAE DTAA, capital gains from debt mutual funds are exempt in India if the assessee is a UAE tax resident, even if UAE does not levy personal income tax. The ruling clarifies that 'liable to tax' under the treaty refers to residence-based jurisdiction, not actual tax payment, impacting cross-border investors and tax planners.

ITAT Pune rules that once the assessee establishes the identity, capacity, and source of the source of funds (e.g., sale of promoter shares), Section 68 cannot be invoked to treat legitimate capital gains as unexplained cash credits. This safeguards taxpayers from arbitrary recharacterization of income where the transaction trail is transparent.

ITAT Mumbai rules that for capital gains computation under Section 50C, the stamp duty value as on the date of the Memorandum of Understanding (MOU) applies, not the registration date, if procedural delays cause the transfer. This holding impacts taxpayers facing delays in property transfers, ensuring fair valuation for tax purposes.

ITAT Ahmedabad rules that a mere agreement to purchase a residential property does not satisfy Section 54 exemption requirements; a registered conveyance deed is mandatory to claim capital gains tax relief. The ruling clarifies that taxpayers must ensure legal title transfer to avoid disallowance of exemptions, impacting property sellers relying on unregistered agreements.

ITAT Bangalore rules that cost of improvement in capital gains computation cannot be disallowed merely for lack of documents. Assessing Officer must verify claims through valuation.