Share transaction classification depends on cumulative factors, with holding period and frequency guiding business income versus capital gains treatment.

Profit from share transactions must be classified by examining the cumulative effect of relevant factors, including the assessee's intention at purchase, treatment in the accounts, frequency and magnitude of transactions, holding period, and whether a separate investment portfolio was maintained. Although the shares were shown as investments in the books and that treatment had been accepted earlier, the short holding periods and repeated transactions pointed to trading features. As the material needed to apply the holding-period and transaction-frequency criteria was incomplete, the matter required re-examination by the Assessing Officer and income was to be recomputed on that basis.

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Issues: Whether profit from share transactions was assessable as business income or as capital gains.

Analysis: The assessee had reflected the share holdings as investments in the books and the Revenue had accepted that treatment in earlier years. At the same time, the frequency of transactions in several scrips and the short period of holding in many cases indicated trading characteristics. The governing test was the cumulative effect of relevant factors, including intention at the time of purchase, treatment in the accounts, frequency and magnitude of transactions, holding period, and whether the assessee maintained a distinct investment portfolio. As the material necessary to work out the issue on the basis of holding period and transaction frequency was not fully collected, the matter required re-examination by the Assessing Officer.

Conclusion: The issue was not finally determined on merits at the appellate stage and the Assessing Officer was directed to recompute the income in accordance with the stated holding-period criteria.

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