CAPITAL ASSET MEANING
Capital asset meaning is given as under : –
- Property of any kind held by an assessee, whether or not connected with his business or profession;
- Any securities held by a Foreign Portfolio Investors (‘FPIs’) which has invested in such securities in accordance with the SEBI regulations.
POINTS TO CONSIDER IN ORDER TO DETERMINE CAPITAL ASSET MEANING
- Property of any kind held by assessee is a capital asset when it does not fall in negative list of capital assets (to be discussed later).
- Property includes –
- Movable assets;
- Immovable assets;
- Intangible assets
- Incorporeal rights
- Property also includes – any rights in or in relation to Indian company including rights of management or control or any other rights whatsoever
LIST OF ASSETS NOT CONSIDERED AS CAPITAL ASSET
ASSETS NOT CONSIDERED AS CAPITAL ASSET
Following asset shall not be covered under capital asset meaning
- Any stock-in-trade [other than securities held by FPIs]; or
- Consumable stores; or
- raw materials held for the purpose of the business or profession of the assessee shall not be considered as capital asset.
- Personal effects, that is to say, movable property, including wearing apparel and furniture held for personal use by the assessee or any member of his family dependent on him shall not be considered as capital assets Personal effects cover only movable property and any immovable property held by assessee would be a capital asset
FOR EXAMPLE : – Refrigerator, TV, etc. should be treated as personal effects .
ASSETS NOT CONSIDERED AS CAPITAL ASSET – PERSONAL EFFECTS EXCLUSIONS
Following items are excluded from definition of personal effects:
- Jewellery; [Refer next slide for jewellery]
- Archaeological collections;
- Sculptures; or
- Any work of art .
- Thus, aforesaid items will be treated as capital assets .
DEFINITION OF JEWELLERY
- The expression ‘jewellery’ includes the following : –
- Ornaments made of gold, silver, platinum or any other precious metal; or
- Any alloy containing one or more of such precious metals
- Whether or not containing any precious or semi-precious stones
- Whether or not worked or sewn into any wearing apparel; or
- Precious or semi-precious stones,
- Whether or not set in any furniture, utensil or other article or
- Worked or sewn into any wearing apparel .
ASSETS NOT CONSIDERED AS CAPITAL ASSET – RURAL AGRICULTURAL LAND [ NOT COVERED UNDER CAPITAL ASSET MEANING]
- Only Rural agricultural land in India is excluded from the definition of capital asset . Urban agricultural land would be treated as capital asset and capital gain will arise on sale of urban agricultural land .
- URBAN AGRICULTURAL LAND
|S.No||Population of municipality or cantonment board||Shortest aerial distance from local limits of municipality or cantonment board|
|1 .||10,001 – 1,00,000(More than 10,000 but not exceeding 1,00,000)
|2 Kms (or less)|
|2 .||1,00,001-10,00,000(More than 1,00,000 but not exceeding 10,00,000)||6 Kms (or less)|
|3 .||More than 10,00,000||8 Kms (or less)|
The following agricultural land, being land situated within the specified urban limits, would be urban agricultural land –
- agricultural land situated in any area within the jurisdiction of a municipality or cantonment board having population of not less than 10, 000 (according to last preceding census); or
- agricultural land situated in any area within such distance from local limits of municipality or cantonment board, measured aerially, as shown hereunder –
ASSETS NOT CONSIDERED AS CAPITAL ASSET – BONDS
- Specified Gold Bonds : – 6½% Gold Bonds, 1977, or 7% Gold Bonds, 1980, or National Defence Bonds
- Special Bearer Bonds, 1991 issued by the Central Government;
- Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 or deposit certificates issued under the Gold Monetisation Scheme, 2015 notified by the Central Government.