Under which of the following circumstances may ‘capital gains’ arise?
1. When there is an increase in the sales of a product
2. When there is a natural increase in the value of the property owned
3. When you purchase a painting and there is a growth in its value due to increased demand
Answer:
(b)
Core Books/NCERT
Capital gains refer to the profit that arises from the sale of an asset, such as property or an investment, when the selling price exceeds the purchase price. Capital gains do not arise from an increase in sales of a product, but they do occur when there is a natural increase in the value of a property or when the value of an asset like a painting increases due to demand. Thus, the correct answer is (b) 2 and 3 only.