While computing income under the head income from capital gains, the most important thing to understand is the definition of a capital asset. However, let us discuss certain assets which are not considered capital assets. Under Section 2(14) following assets have been specially excluded from the scope of the definition of capital assets:
(i) Any stock-in-trade, raw materials, consumable stores held by any assessee for the purposes of his business or profession. It is to be noted that any securities (other than stock in trade which is not held by a foreign institutional investor) held by a Foreign Institutional Investor which has invested or deposited in such securities in accordance with the regulations made under the Securities and Exchange Board of India (SEBI) Act, 1992 shall not be treated as stock-in-trade
(ii) Personal effects (movable property) including wearing apparel, motor car, electrical appliances, refrigerator, furniture etc.; ornaments excluding jewellery, archaeological collections, drawings, paintings, sculptures, or any work of art held for personal use by the assessee or any other member of his family dependent upon him.
Explanation: The Capital Gain on the transfer of jewellery is fully taxable and as such, it is necessary to understand the meaning of the term 'jewellery'. According to the explanation attached to Section 2 (14) (ii) the term "jewellery" includes:
(a) ornaments made of gold, silver, platinum or any other precious metal or any alloy precious containing one or more of such precious metals whether or not containing any or semi-precious stone and whether or not worked or sewn into any wearing apparel;
(b) precious or semi-precious stones, whether or not set in any furniture, utensil article or worked or sewn into any wearing apparel.or other
(iii) Agricultural Land in rural India-But the land should not be situated
(a) Within the limits of any municipality or cantonment board having a population of 10,000 or more or
(b) Within distance measured aerially (shortest aerial distance) from any municipality or cantonment board as follows:
within 2 kilometres
within 6 kilometers
within 8 kilometers
Population of Muncipality/Cantonment
More than 10,00,000
Note: Population is to be taken as per the last preceding census of which the relevant figures have been published before the first day of the previous year.
(iv) 6% Gold Bonds 1977 or 7% Gold Bonds 1980 or National Defence Gold Bonds, 1980. issued by the Central Government
(v) Special Bearer Bonds, 1991.
i) Gold Deposit Bonds issued under Gold Deposit Scheme 1999.
ii) Deposit certificates issued under Gold Monetisation Scheme, 2015. [w.e.f. A.Y. 2016-17].
Let us discuss whether a car owned by an assessee and used by him and his family will be considered as a capital asset or not-
A car owned and used by the assessee for his personal or family purposes falls in the category of personal effects. Had the car been owned by the assessee for his own business, it would have been a capital asset. Any movable asset which is in the nature of personal effects is specially excluded from the definition of a capital asset as given in Section 2(14).
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