Section 2(42A) in The Income- Tax Act, 1995

Central Government Act

(42A) 1[ 2[ short- term capital asset" 3 means a capital asset held by an assessee for not more than 4[ thirty- six] months immediately preceding the date of its transfer":] 6[ Provided that in the case of a share held in a company 7[ or any other security listed in a recognised stock exchange in India or a unit of the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963 ) or a unit of a Mutual Fund specified under clause (23D) of section 10], the provisions of this clause shall have effect as if for the words" thirty- six months", the words" twelve months" had been substituted.] Explanation 8[ 1].-- 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 9[ sub- section (1)] 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;

(c) 10[ in the case of a capital asset being a share or shares in an Indian company, which becomes the property of the assessee in consideration of a transfer referred to in clause (vii) of section 47, there shall be included the period for which the share or shares in the amalgamating company were held by the assessee;]

(d) 11[ in the case of a capital asset, being a share or any other security (hereafter in this clause referred to as the financial asset) subscribed to by the assessee on the basis of' his right to subscribe to such financial asset or subscribed to by the person in whose favour the assessee has renounced his right to subscribe to such financial asset, the period shall be reckoned from the date of allotment of such financial asset;

1. Inserted by the Finance (No. 2) Act, 1962, w. e. f. 1- 4- 1962.

2. Substituted by the Finance Act, 1973, w. e. f. 1- 4- 1974. It was also amended by the Finance Act, 1966, w. e. f. 1- 4- 1966; Finance (No. 2) Act, 1967, w. e. f. 1- 4- 1967 and Finance Act, 1968, w. e. f. 1- 4- 1969.

4. Substituted for" sixty" by the Finance (No. 2) Act, 1977, w. e. f. 1- 4- 1978.

6. Inserted by the Finance Act, 1987, w. e. f. 1- 4- 1988.

7. Inserted by the Finance Act, 1994, w. e. f. 1- 4- 1995.

8. Ibid.

9. Substituted for" clauses (i) to (iii)" by the Finance (No. 2) Act, 1967, w. e. f. 1- 4- 1967.

10. Inserted by the Finance (No. 2) Act, 1967 w. e. f. 1- 4- 1967.

11. Inserted by the Finance Act, 1994, w. e. f. 1- 4- 1995.

(e) in the case of a capital asset, being the right to subscribe to any financial asset, which is renounced in favour of any other person, the period shall be reckoned from the date of the offer of such right by the company or institution, as the case may be, making such offer;]

(f) 1[ in the case of a capital asset, being a financial asset, allotted without any payment and on the basis of holding of any other financial asset, the period shall be reckoned from the date of the allotment of such financial asset;]

(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,] 2[ Explanation 2.- For the purposes of this clause, the expression" security" shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 3 (42 of 1956 )