What Is A Transfer ? under ‘Capital
Gain’
As per Section 2(47) “transfer” in relation to a capital asset includes:
(i) sale, exchange or relinquishment of the asset, or
(ii) the extinguishment of any tight therein, or
(iii) the compulsory acquisition thereof under any law, or
(iv) in a case, where the asset is converted by
the owner thereof into or is treated by him as stock-in-trade of a business
carried on by him, such conversion or treatment, or
(v) any transaction involving the allowing of
the possession of any immovable property to be taken or retained in part
performance of a contract of the nature referred to in Section 5 3A of the
Transfer of Property Act, 1882, or
(vi) any transaction, whether by way of becoming a
member of, or acquiring shares in a co-operative society, company or other AOP
or by way of an agreement or any arrangement or in any other manner whatsoever
which is effected by transferring or enabling enjoyment of, any immovable
property.
We have seen above that it is only on account of transfer of a capital asset that there is the liability of income tax on capital gains. However, in certain cases there is a tax liability in case of deemed capital gains also. But there are certain transactions which are not treated as transfer as explained below which do not come within the purview of taxation under the head capital gains. All these have to be noted carefully to ascertain the correct liability of an assessee under the head capital gains.