Section 45(1) - Chargeability of Capital Gains

• Section 45(1) of the Income Tax Act, 1961 is considered to be the charging section of income under the head 'Capital Gains'.

• As per section 45(1), any profits or gains arising from the transfer of a capital asset effected in the previous year (PY) shall be chargeable to income tax under the head Capital Gains in the PY in which transfer takes place.

• Any income is chargeable under the head Capital Gains if it fulfills all of the following conditions:

• Capital Asset must be there. [Section 2(14) - Definition of Capital Asset]

• Transfer of such capital asset shall take place. [Section 2(47) - Definition of Transfer] 

• Such capital asset must be transferred during the PY.