Court affirms shares profit as capital gain, considering investment intent and consistent treatment.

The High Court dismissed the appeals, upholding the classification of profit from the sale of shares as capital gain. The court emphasized the factual determinations regarding the maintenance of separate portfolios for investment and business activities, consistent treatment of shares as investments, and lack of evidence indicating a different intention. The judgment relied on various factors such as holding period, valuation, and conversion of stock to investments in subsequent years, affirming the lower authorities' decision that the profit should be treated as capital gain.

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Issues: Whether profit on sale of shares was to be assessed as capital gains or as business income when the assessee maintained separate investment and trading portfolios.

Analysis: The shares in question were found to have been acquired and held as investments from the outset, shown consistently in the investment portfolio, and valued on cost basis in accordance with the accepted accounting treatment for investments. The factual findings below also showed that an assessee may maintain two portfolios, one for investment and one for trading, and that the mere existence of share dealing business does not by itself make all share sales trading transactions. The revenue failed to show any perversity in these concurrent findings of fact. The court also noted that the CBDT had recognized the possibility of two separate portfolios.

Conclusion: The profit on sale of the shares was rightly treated as capital gains and not business income.

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