Section 3 - Amendment of Section 2 - Finance (No. 2) Act, 1962

3. Amendment of Section 2 In section 2 of the Income tax Act, after clause (42), the following clause shall be inserted, namely : (42A) short term capital asset means a capital asset held by an assessee for not more than twelve months immediately preceding the date of its transfer. Explanation : (i) In determining the period for which any capital asset is held by the assessee (a) in the case of a share held in a company in liquidation, there shall be excluded the period subsequent to the date on which the company goes into liquidation; (b) in the case of a capital asset which becomes the property of the assessee in the circumstances mentioned in clauses (i) to (iii) of section 49, there shall be included the period for which the asset was held by the previous owner referred to in the said section. (ii) In respect of capital assets other than those mentioned in clause (i), the period for which any capital asset is held by the assessee shall be determined subject to any rules which the Board may make in this behalf.