Shares held to earn dividends classified as capital assets, so sale proceeds taxed as capital gain, not business income

HC affirmed that the Tribunal's factual finding - the shares were not treated as stock-in-trade but held to earn dividends - meant profit on their sale qualified as capital gain, not business income. The court noted a company may hold some shares as trading stock and others as capital assets for dividend income; since these shares were maintained as capital, the resulting gain on sale was taxable as capital gain rather than business income.

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The High Court of Madras ruled that profit on sale of shares should be treated as capital gains, not business income, as the shares were held for earning dividends and not as stock-in-trade. The judgment favored the assessee over the Department.

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