Section 45 of the Income Tax Act

Income-tax Act, 2025: s.67

Section 45 of the Income-tax Act, 1961 corresponds to section 67 (Capital gains) of the Income-tax Act, 2025.

Read section 67 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 45 is CIT v. B.C. Srinivasa Setty (128 ITR 294), cited in 628 of the 1,374 judgments on BharatTax that turn on this section.

Leading authorities on Section 45

CIT v. B.C. Srinivasa Setty
128 ITR 294 · 1981 · Supreme Court
628
citing judgments

When the cost of acquisition of a capital asset cannot be determined, the computation mechanism for capital gains fails, and thus no capital gains can be charged. This establishes a broader principle that a charging section cannot operate in the absence of specific machinery provisions for computation.

CIT v. Balbir Singh Maini
398 ITR 531 · 2017 · Supreme Court
228
citing judgments

A transfer of immovable property, for the purpose of capital gains under section 2(47)(v) of the Income-tax Act, occurs only when the agreement allowing possession in part performance of a contract is a registered instrument, as mandated by Section 53A of the Transfer of Property Act.

Chaturbhuj Dwarkadas Kapadia v. CIT
260 ITR 491 · 2003 · High Court
150
citing judgments

For capital gains purposes, a 'transfer' under section 2(47)(v) occurs and capital gains arise in the year when possession of the property is handed over in part performance of a contract, such as a joint development agreement. This was the settled position before the specific provisions of section 45(5A) were introduced.

CIT v. D.P. Sandhu & Bros.
273 ITR 1 · 2005 · Supreme Court
140
citing judgments

Surrender of tenancy rights is a transfer of a capital asset, and the consideration received is a capital receipt subject to capital gains tax. If the cost of acquisition cannot be determined, the transfer of such an asset was not taxable under capital gains prior to the amendment of Section 55(2) in 1995.

Venkataswami Naidu & Co. v. CIT
35 ITR 594 · 1959 · Supreme Court
133
citing judgments

A transaction is considered an adventure in the nature of trade, constituting business income, if there is a pre-determination to sell an asset at a profit. Conduct prior to purchase, as well as subsequent improvements, are relevant in determining the character of the transaction.

CIT v. Manjula J. Shah
355 ITR 474 · 2013 · High Court
113
citing judgments

For capital assets acquired by gift or will, the indexed cost of acquisition under Section 48 is computed with reference to the year the previous owner first held the asset. The period of holding for determining if an asset is long-term also includes the previous owner's holding period, as per Section 2(42A).

A. R. Krishnamurthy v. CIT
176 ITR 417 · 1989 · Supreme Court
85
citing judgments

The cost of acquiring leasehold rights can be determined, and the transfer of such rights, including mining leases, constitutes a transfer of a capital asset, making any surplus on such transfer taxable as capital gains.

CIT v. Chugandas and Co.
55 ITR 17 · 1965 · Supreme Court
83
citing judgments

When a taxpayer's sole source of income is from the letting out of properties, such rental income is to be assessed under the head 'Income from House Property'.

CIT v. George Henderson & Co. Ltd.
66 ITR 622 · 1967 · Supreme Court
82
citing judgments

The 'full value of consideration' for computing capital gains under Section 48 of the Income Tax Act, 1961 (or its predecessor, Section 12B of the 1922 Act), means the actual price bargained for and received or accrued by the parties. It does not refer to the market value or any notional value of the asset transferred.

CIT v. Hariprasad & Company Pvt. Ltd.
99 ITR 118 · 1975 · Supreme Court
78
citing judgments

The terms 'income' or 'profits and gains' are inclusive of losses, signifying that losses are 'minus income' to be factored into the computation of taxable income. Therefore, set-off and carry forward provisions for losses apply exclusively to taxable income or gains and cannot be pressed into service against non-taxable gains, such as those exempt under a DTAA or other specific provisions.

Judgments on Section 45

DCIT, Cochin vs. Shri M George ( Mukkadayil Joseph George), Cochin

In the result, the Revenue’s appeal is allowed

ITA 525/COCH/2011[2006-07]Status: DisposedITAT Cochin31 Oct 2023AY 2006-07

Bench: Shri Sanjay Arora & Shri Manomohan Dasdy. Cit, Circle 2(1), Range – 2 M.J. George C.R. Building, I.S. Press Road, Mukkadayil House Kochi 682018 Vs. Krishnaswamy Cross Road Ernakulam, Kochi - 682035 [Pan: Adgpg6991D] (Appellant) (Respondent) Revenue By: Sri Sajit Kumar Das, Cit-Dr Assessee By: Sri R. Lokanathan, Ca Date Of Hearing: 17.08.2023 Date Of Pronouncement: 31.10.2023 Order Per Sanjay Arora, Am This Is An Appeal By The Revenue Agitating The Allowance Of The Assessee’S Appeal Contesting It’S Assessment Under Section 143(3) Of The Income Tax Act, 1961 (The Act) Dated 31.12.2008 For Assessment Year (Ay) 2006-07, By The Commissioner Of Income Tax (Appeals)-2, Kochi [Cit(A)] Vide His Order Dated 31.03.2011. 2. The Facts Of The Case In Brief Are That The Assessee, An Individual, Who Had Returned His Income For The Year At Rs.63,420/- (From Business & Other Sources), Was Found To Have A Credit Of Rs.899.10 Lakhs In His Bank Account On 14.02.2006. The Same Was Explained In The Assessment Proceedings As Sale Proceeds Of 5.21 Acres Of Land At Kakkanad Village, Falling Under Thrikkakara Panchayat, Sold For Rs.977.10 Lakhs Vide Registered Sale Deed Dated 13.02.2006. The Sale Was In Pursuance Of An Agreement To Sell Dated 09.01.2006, Receiving Rs.78 Lakhs As Advance. The Said Land

For Appellant: Sri R. Lokanathan, CAFor Respondent: Sri Sajit Kumar Das, CIT-DR
Section 143(3)Section 2(14)(iii)

Smt Sunitha Prem Victor, Trivandrum vs. ITO Ward 2(3), Trivandrum

In the result, the assessee’s appeal is partly allowed for statistical purposes

ITA 1009/COCH/2022[2014-15]Status: DisposedITAT Cochin30 Oct 2023AY 2014-15

Bench: Shri Sanjay Arora & Shri Manomohan Dassunita Prem Victor The Income Tax Officer Tc 25/2813 Mathrubhumi Road Ward – 2(3) Vs. Vanchiyoor, Trivandrum 695035 Trivandrum [Pan:Akopv8566C] (Appellant) (Respondent) Assessee By: Ms. Divya Ravindran, Advocate Revenue By: Smt. J.M. Jamuna Devi, Sr. D.R. Date Of Hearing: 11.10.2023 Date Of Pronouncement: 30.10.2023 O R D E R Per Sanjay Arora, Am This Is An Appeal By The Assessee Against The Order Dated 26.10.2022 By The Commissioner Of Income Tax (Appeals), Nfac, Delhi [Cit(A)],Partly Allowing Her Appeal Contesting Her Assessment Under Section 143(3) Of The Income Tax Act, 1961 (Hereinafter ‘The Act’) Dated 27.12.2016 For Assessment Year (Ay) 2014-15. 2. The Brief Facts Of The Case Are That The Assessee Returned Her Income For The Relevant Year On 18.12.2014 At Rs.5,67,250, Claiming Deduction Under Section 54 Of The Act At Rs.91,05,096 In Respect Of Construction Of A Residential House During The Relevant Year Against The Capital Gain Arising To Her On Sale Of 3 Pieces Of Land Sold During March, 2013 To November, 2013. The Claim Was, Admitting Her Mistake Inasmuch As The Capital Asset/S Sold Was Not A Residential House, Requested By The Assessee Vide Letter Dated 29.11.2016 For Being Considered U/S. 54F Of The Act; She Not Owning Any Other Residential House On The Date Of Transfer/S. Earlier, On 25.11.2016, A Revised Statement Of Income Was Filed Claiming Exemption With Reference To The Total

For Appellant: Ms. Divya Ravindran, AdvocateFor Respondent: Smt. J.M. Jamuna Devi, Sr. D.R
Section 139(1)Section 139(4)Section 139(5)Section 143(3)Section 54Section 54F