Question

Which of the following is not included in the Capital Asset under Section 2(14) of the Income Tax Act?

• A. Any stock in trade
• B. Special Bearer Bonds, 1991 issued by Central Government
• C. (a) and (b)
• D. None of the above

Hint:

Always focus on the exclusions under Section 2(14) while studying "Capital Asset." Questions often test your recall of these specific exceptions like stock-in-trade and Special Bearer Bonds, 1991.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept.
Section 2(14) of the Income Tax Act, 1961 defines the term "capital asset". The definition is comprehensive and includes property of any kind held by an assessee. However, the section also clearly specifies certain exclusions that do not qualify as capital assets.

Step 2: Detailed Explanation.
As per Section 2(14): - Stock-in-trade: Any stock-in-trade, consumable stores, or raw materials held for business or profession are specifically excluded from the definition of a capital asset under Section 2(14)(i).
- Special Bearer Bonds, 1991: These are government-issued bonds which are also explicitly excluded from being treated as capital assets under Section 2(14)(iv).
Since both of these — (a) and (b) — are mentioned as exclusions, they are not included within the meaning of a "capital asset." Hence, the correct option is (C).
Step 3: Final Answer.
Both "Any stock in trade" and "Special Bearer Bonds, 1991" are excluded from the definition of a capital asset under Section 2(14) of the Income Tax Act, 1961.