Share sale profits taxed as short-term capital gain where facts showed investment activity, not regular trading business.

Profit from sale of shares was treated as short-term capital gain, not business income, because the Tribunal applied the CBDT circular and the recognised indicia for distinguishing investment from trading. It found that the assessee invested substantially out of own funds, reflected the shares as investments in the balance sheet, earned dividend income, and carried on a professional occupation rather than a regular share-trading business. The finding was based on appreciation of facts and was consistent with earlier assessment years, so the character of the receipts remained capital in nature and the revenue's challenge failed.

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Issues: Whether the profit arising from sale of shares was taxable as short-term capital gain or as business income.

Analysis: The Tribunal applied the CBDT circular and the relevant indicia for distinguishing investment from trading. It found that the assessee had invested substantially out of his own funds, that the shares were reflected in the balance sheet as investments, that dividend income was also earned, and that the assessee's professional occupation supported the inference that the share transactions were not carried on as a regular business activity. The finding was based on appreciation of facts and was consistent with the view taken in earlier assessment years.

Conclusion: The gain on sale of shares was rightly taxed as short-term capital gain and not as business income, and the revenue's appeal failed.

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