27.  Capital gains.-

(1)   Any profits or gains arising from the transfer of a capital asset shall be chargeable under the head "Capital gains" and shall be deemed to be income of the income year in which the transfer took place.

(2)   For the purposes of sub-section (1) and section 28 and 29,-

(a)    "capital asset" does not include-

(i)     any asset or class of assets in respect of which the assessee is entitled to an allowance for depreciation under the Third Schedule; and

(ii)    any immovable property; and

(b)   "transfer" includes the sale, disposition, exchange or relinquishment of the asset, or the extinguishment of any rights therein, but does not include-

(i)     any transfer by reason of the compulsory acquisition of any capital asset under any law for the time being in force;

(ii)    any transfer of a capital asset under a gift, bequest or will or an irrevocable trust;

(iii)   any distribution of the assets of a company to its shareholders on its liquidation; and

(iv)   any distribution of capital assets on the dissolution of a firm or other association of persons or the partition of a Hindu undivided family.