Section 45 ITA 1961 charges 'CAPITAL GAINS' on the transfer of:
Answer & Solution
Correct answer: A.
1. Section 45(1) Income Tax Act 1961: 'Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections 54 to 54H, be chargeable to income-tax under the head 'Capital gains'.'
2. Section 2(14) defines 'CAPITAL ASSET' as property of any kind held by an assessee, EXCLUDING:
3. (i) STOCK-IN-TRADE;
4. (ii) PERSONAL EFFECTS (movable property held for personal use — except jewellery, archaeological, paintings, sculptures, art works);
5. (iii) AGRICULTURAL LAND in rural areas (specific definition);
6. (iv) Specific Government bonds;
7. (v) Specified gold bonds, etc.
8. SHORT-TERM (held ≤ 36 months / 24 for property / 12 for listed securities) vs LONG-TERM capital assets.
9. Hence option B is correct.
_Source: CS Executive Paper 4 Tax Laws (ICSI BoS) + Income Tax Act 1961 + CGST Act 2017 — Income Tax Act 1961, Sections 45 and 2(14)_
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