Is it a good idea to include "research interests" section in CV for PhD admissions? If so, what to include in it? I plan to apply for a PhD position in Engineering. I am working on the CV and while going through google looking for examples I found references to a section Research Interests. I was wondering if it would be a good idea to include it or leave it altogether. 

If included, it is pretty obvious to tailor it to the PhD position one is applying to. But the question then would be to whether keep it limited to the position in question or include your other interests. Given that, nowadays, having multidisciplinary research interests is a desirable trait, I tend to think the latter. However, I need opinions from other people. Before answering the second part, please state as to why including Research Interest is a good idea in the first place.
The section on research interests should help to identify these quickly. In principle one could deduce your interests from your publications, talks, thesis and so on, but an exposed lists makes life easier.

However, you can not just tailor your list of research interests arbitrarily to the position as they should be in line with the rest of the CV. If you state that something is one of your top interests but this topic does not appear anywhere else in your CV this looks suspicious. My advice is, to be totally honest here. Do not include anything which is not truly your research interest, and if you include something that does not show up in your CV, have some explanation for this somewhere else (e.g. in a research statement or cover letter). Don't write one of these applications where everything looks like a perfect fit for the position, but nothing is backed up with evidence.