Some of the latest Judgments of the Courts with reference to Capital Gains are reproduced below which will help the tax payers to save tax on Capital Gains :-
Shares investment out of own funds after delivery and payment profit is Capital Gain & not business.The Delhi High Court in the case of CIT v. Rohit Anand 327 ITR 445 held that where the assessee did not intend to treat shares as business asset and made investment in the shares out of own funds, took delivery after payment and held them for a period then the transaction of sale of such sales would give rise to Capital Gains and not business income.
Agricultural land sale and new land purchase in sons’ name as co-owner still tax deduction entitled.The Punjab and Haryana High Court in the case of CIT V. Gurnam Singh 327 ITR 278 held that in a case where the Agricultural land was sold by an assessee and investment made in purchase of another land within the stipulated time but the new land was registered in the revenue records in the name of the assessee and his only son as co-owner still the assessee was entitled to deduction under section 54B of the Income-tax Act, 1961.
Tehsildar report about land being beyond eight kilometers from municipal limit hence gains from transfer exempted. The Punjab and Haryana High Court in the case of CIT v. Lal Singh & Others 325 ITR 588 held that in a case were the assessee produced a certificate from the Tehsildar that the land which was sold by the assessee was situated beyond eight Kilometers from the Gurgaon municipal limits hence there was no liability to payment of Capital Gains on the sale of agricultural land. In this case the assessee produced a report of the patwari countersigned by the Tehsildar to say that the land which was sold was situated beyond 8 Kms. From the Gurgaon municipal limits. However, the Inspector of income-tax also submitted the report in which neither the Khasra number of the land of the assessee was given nor had it been explained how the distance of the land from the municipal limits was measured. Hence, it was finally held that the report of the Inspector not be relied and based on the report of the Tehsildar the matter was decided.
Interest on amount borrowed for purchase of property is cost of acquisition of property, hence deductible. The Karnataka High Court in the case of CIT v. Sri Hariram Hotels, Pvt. Ltd. 325 ITR 136 held that Interest on loan paid for purchasing the property will have to be included while calculating the cost of acquisition of the asset.
The Bombay High Court in the case of CIT v. Smt. Debbie Alemao 331 ITR 59 held that even if no agricultural income was shown in the Income-tax Return in respect of the agricultural land which was sold but as the land was shown in the revenue records as “Agricultural Land” hence Capital Gains would not arise on selling which land. In this case the Assessing Officer had bought the Capital Gains to tax on the ground that the land had non-agricultural potential as it was sold at nearly ten time the purchase price within two years of purchase but finally the court held that these agreements of tax department would merely not result into tax liability.
The Assessing Officer brought the Capital gains to tax in respect of sale of agricultural land by the assessee on the ground that the land had non-agricultural potential and the fact was that it was sold at nearly 10 times the purchase price within two years from the date of its purchase and the said land was purchased by the purchaser for the purpose of setting of a beach resort hence the land was a non agricultural land. However, the above thinking of the tax department was not approved by the Hon’ble Judges of the Bombay High Court in the case of CIT v. Smt. Debbie Alemao 331 ITR 59 wherein it was held that as the land was shown as Agricultural land in revenue records and that no permission was taken by the assessee for conversion of land use, hence, there was no Capital gain on such sale.