A Capital Asset refers to any significant property owned by an individual or business for investment or personal use, such as land, buildings, stocks, bonds, or machinery. These assets are not meant for regular trading but for generating long-term value. Capital assets are categorized into two types: short-term (held for less than 36 months) and long-term (held for more than 36 months). When these assets are sold, the profit earned is called a capital gain, which is taxable under the Income Tax Act. The tax rate depends on whether the gain is short-term or long-term, with specific exemptions available.