Meaning of capital asset clarifies inclusions, exclusions, and treatment of jewellery and rural agricultural land. The provision defines capital asset as property of any kind held by an assessee, including specified securities held by certain investors, notified gold bonds and deposit certificates, and certain insurance units where other exemptions do not apply, while excluding stock-in-trade and personal effects. Jewellery, works of art and similar items are treated as capital assets despite the personal-effects exclusion, with clarifications on ornaments and utensils. The rural agricultural land test for capital-asset status is determined by aerial distance from municipal or cantonment limits measured against population bands.