By the Explanation to s. 2 ( 6A) accumulated profits inciude ·capital 'gains not arising within the excepted period. The Explanation is undoubtedly couched in negative form, but there is no · ground for accepting the argument of counsel that in the sub. stantive clauses oL the definition, accumulated profits do not include capital gains. The Explanation plainly implies that within the expression "accumulated profits" are included capital _ gains outside the excepted periods. On the interpretation contended for by counsel, the Explanation which seeks to exclude . "capital gains" from the content of accumulated profits would have no meaning. By sub-s. (1) of s.12B tax-is payable by an assessee under the head "capital gains" in respect of any profits · or gains arising .from the sale, exchange, relinquishment or transfer of a capital asset effected. after the 31st day of March, 1956, ' and such profits and gains shall be deemed to be income of the previous year. in which· the sale, exchange, relinquishment or transfer took place. Under the Indian Income-tax Act, 1922, · ·"capital gains" arising after March 31, 1946 were made charge. able by the Income-tax and Excess Profits Tax (Amendment) Act, 194 7, which inserted s. 12B in the Act. _ The levy was, however, abolished by the Finance Act, 1949, and the operation · of s. 12B ::is enacted by the Amendment Act of 1947 was restricted to capital gains arising before April l, 1948. By the Finance . Act 3 of 1956 which introduced a new s. 12B, capital gains were ·again made chargeable to tax with effect from April 1, 1957 · on the profits or gains arising from the transfer. of capital assets, which expression is defined in s. 2 ( 4A) as meaning "property of any kind held by an assessee, whether or not connected with his business, profession or vocation, but does not include-· -
