<s>[INST] What is the meaning of capital asset? [/INST] Capital asset is defined to include:

a) Any kind of property held by an assessee, whether or not connected with business or profession of the assesse.

b) Any securities held by a FII which has invested in such securities in accordance with the regulations made under the SEBI Act, 1992.

However, the following items are excluded from the definition of "capital asset":

Any stock-in-trade, consumable stores, or raw materials held by a person for the purpose of his business or profession.

E.g., Motor car for a motor car dealer or gold for a jewellery merchant, are their stock-in-trade and, hence, they are not capital assets for them.
Personal effects of a person, that is to say, movable property including wearing apparels (*) and furniture held for personal use, by a person or for use by any member of his family dependent on him.

(*) However, jewellery, archeological collections, drawings, paintings, sculptures, or any work of art are not treated as personal effects and, hence, are included in the definition of capital assets.
Agricultural Land in India, not being a land situated:
* Within jurisdiction of municipality, notified area committee, town area committee, cantonment board and which has a population of not less than 10,000;

* Within range of following distance measured aerially from the local limits of any municipality or cantonment board:

*​ not being more than 2 KMs, if population of such area is more than 10,000 but not exceeding 1 lakh;

* not being more than 6 KMs , if population of such area is more than 1 lakh but not exceeding 10 lakhs; or

* not being more than 8 KMs , if population of such area is more than 10 lakhs.

Population is to be considered according to the figures of last preceding census of which relevant figures have been published before the first day of the year.

6½% Gold Bonds, 1977 or 7% Gold Bonds, 1980 or National Defence Gold Bonds, 1980 issued by the Central Government.
Special Bearer Bonds, 1991, issued by the Central Government
Gold Deposit Bonds issued under Gold Deposit Scheme, 1999.
Deposit certificates issued under the Gold Monetisation Scheme, 2015.​
Following points should be kept in mind :

The property being capital asset may or may not be connected with the business or profession of the taxpayer. E.g. Bus used to carry passenger by a person engaged in the business of passenger transport will be his  Capital asset.
Any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992 will always be treated as capital asset, hence, such securities cannot be treated as stock-in-trade. ​ </s>