Share sale classification turned on overall investment pattern, with delivery-based transactions treated as short-term capital gain.

Delivery-based share transactions by a salaried employee, funded from own resources and consistently shown as investments at cost, were treated as capital assets rather than trading stock. The fact that earlier assessment years had accepted similar gains as capital gains supported the same characterisation. Turnover, frequency of transactions, Instruction No. 1827 and Circular No. 4/2007 were not ative on their own, because no single factor controls the classification and the overall factual pattern must be applied. On that basis, the surplus from sale of shares was assessed as short-term capital gain and not business income.

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Issues: Whether surplus arising from sale of shares was to be assessed as short term capital gain or as business income.

Analysis: The assessee was a salaried employee, the share transactions were delivery based, the purchases were made out of own funds, and the shares were consistently treated as investments and valued at cost. The earlier assessment years had also accepted similar gains as capital gains. The reliance on turnover, frequency of transactions, Instruction No. 1827 and Circular No. 4/2007 did not dislodge the position that no single factor was decisive and that the overall factual pattern governed the characterization of income.

Conclusion: The surplus on sale of shares was rightly assessed as short term capital gain and not business income, in favour of the assessee.

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