Income from Capital Gain
Definition of Capital Asset
Mainly Capital asset means “
all tangible property which cannot easily be converted into cash and which is usually held for a long period, including real estate ,equipment,
”.Another word we can say, Capital asset means an item that we own for investment or personal purposes, such as stocks, bonds, or stamp collections. The saleof a capital asset produces a capital gain or a capital loss. Assets we use in our businessand inventory are not capital assets.
Conditions Need To Fulfill To Be Taxable System
Under the section 31 of company act, 1994 a capital gain needs to fulfill the followingconditions to be taxable system:
It will arise from sale or transfer of capital asset.
Title of the property must be transferred to the purchaser.
It will be taxable in the year of transfer unless it has been re-invested inapproved fields.
Capital loan, if any, be eligible for treatment under section 40 of company act,1994 as set off and carry forward or losses.
System of tax-exempted transfer for capital assets
Under section 2(66) of I.T. Ordinance, 1984 provides that transfer in relation to capitalassets includes the sale, exchange or relinquishment of assets or the extinguishments of any right therein, but does not include:
Any transfer of the capital asset under a gift, bequest, will or an irrevocabletrust;
Any distribution of the assets of a company to its share holders on itsliquidation; and
Any distribution of capital assets on the dissolution of a firm or other association of persons or on the partition of a Hindu Undivided Family.
Further, it has also be provided through amendment that transfer of holdingcompany’s assets to subsidiary company will also be exempted from chargingcapital gains subject to the following:
Total share capital of subsidiary company shall remain under the controlof holding company.
The subsidiary company will be situated in taxable territory (i.e.Bangladesh); and