What is Capital Gain:
According to Income Tax Act,1961 heads of capital gain is defined as gains derived on transfer of capital asset. Capital Gain is the profit or gain of an assessee coming from the transfer of a capital asset effected during the previous year or assessment year. "Capital Asset" and transfer are predefined in income tax act.

What is Capital Asset:
Under section 2(14) of the Income Tax Act,1961 Capital Asset is defined as property of any kind held by assesse including property held for his business or profession. It includes all type real property as well as all rights in property. It is also defined as gains on transfer of assets in which there in no cost of acquisition like:
Goodwill of business generated by assessee
Tenacy rights
Stage carriage permits
Loom hours
Right to manufacture
Processing & production of any article or things

Assets Which Don't Come Under Heads of Capital Assets
According to Income Tax Act,1961 there are few assets which don't form a part of Capital Assets, which are as follows:
Stock of goods and raw materials used by assessee for his business or profession Those property which are movable like wearing apparel, furniture, automobile, phone, household goods etc. Held by assessee. But Jewelry which is also an movable assets comes under heads of Capital Assets
Agricultural property in India. But agriculture land coming under municipal limits (in area having population ore than 10,000) comes under Capital Assets. Agriculture lands within 8 Km from municipal limit also comes under Capital Assets if it is notified by the central government of India
Agricultural property in India. But agriculture land coming under municipal limits (in area having population ore than 10,000) comes under Capital Assets. Agriculture lands within 8 Km from municipal limit also comes under Capital Assets if it is notified by the central government of India
Few Gold Bonds issued by government
Few special bonds issued by central government like Special Bearer Bonds, 1991

Transfer of Capital Assets
Under Section 2(47) of The Income Tax Act,1961 transfer of capital assets is defined as:
Sale, exchange and relinquishment of assets
Extinguishment of any rights in capital assets
Acquisition of capital assets or rights
Conversion of capital asset by its owner as stock in trade of his business, it may also be a term of transfer
Transfer of immovable property under Section 53A of Transfer of Property Act, 1882
Any transaction by which an assessee become enable to act as a member of cooperative society.