The Income Tax Appellate Tribunal (ITAT) in Jodhpur, India, ruled that profits from cryptocurrency sales prior to the introduction of the Virtual Digital Assets (VDA) regime in 2022 should be considered capital gains. The ruling classifies cryptocurrencies, including Bitcoin, as capital assets, resolving the ambiguity surrounding the taxation of cryptocurrencies. The decision stemmed from a case involving an individual who purchased Bitcoin worth $6,478 in 2015-16 and sold it for $788,000 in 2020-21. The individual argued that the sale profits should be regarded as long-term capital gains due to a holding period of over three years. Initially, tax officials disagreed, claiming that cryptocurrencies lack intrinsic value and cannot be classified as property. However, because the holding period exceeded three years, the court ruled that the profits met the criteria for long-term capital gains, allowing the taxpayer to claim deductions under current law. ITAT dismissed the tax officials' arguments, stating that under Section 2(14) of the Income Tax Act, cryptocurrencies constitute property rights. The court noted that any type of property held by the taxpayer, including rights or claims to assets, falls within the definition of capital assets. (Decrypt)

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