1. When there is an increase in sales of product
2. When there is a natural increase in the value of the property owned.
3. When you purchase a painting, there is a growth in its value due to an increase in its popularity.
Select the correct answer using the codes given below:
Explanation
Statement 1 is incorrect: An increase in sales of a product typically results in revenue or business profits, not capital gains. Capital gains arise from the sale of an asset at a price higher than its purchase price, not from the regular sale of products.
Statement 2 is correct: Capital gains can arise when the value of an asset, such as property, appreciates over time. If the property is sold at a higher price than the original purchase price, the difference is considered a capital gain.
Statement 3 is correct: If the value of an asset, such as a painting, increases due to factors like popularity, and you sell it for a higher price than what you paid, the difference is considered a capital gain.
A capital gain is an increase in the asset’s value or investment resulting from the asset or investment’s price appreciation. The following are not included under capital assets:
Any stock, consumables or raw materials that are held for the purpose of business or profession. Goods such as clothes or furniture or paintings which are held for personal use. Land or there is natural increase in property. Special bearer bonds were issued in 1991. Gold bonuses issued by the Central Government. Gold deposit bonds. An increase in sales of a product