Share transaction profits treated as capital gains where books, conduct, and delivery-based holding showed investment intent.

Profits from share transactions were treated as capital gains because the assessee's intention at acquisition, assessed from surrounding facts and conduct, indicated investment rather than trading. The books reflected only an investment portfolio from incorporation, shares were valued at cost, no borrowings were used for purchase, there was no intraday or derivatives activity, and the holdings were delivery-based and retained for substantial periods. The cumulative pattern of dealing, together with consistent past treatment, supported capital gains classification and not business income.

---

---

Issues: Whether the profit arising from the assessee's share transactions was assessable as business income or as capital gains.

Analysis: The decisive factor was the assessee's intention at the time of purchase, to be gathered from the surrounding facts and conduct. The assessee maintained only an investment portfolio in its books from incorporation, valued shares at cost, had no borrowings for such purchases, carried out no intraday or derivatives trading, and had historically been assessed on the same footing. The transactions were delivery-based, the shares were held for substantial periods, and the overall pattern of dealing, when viewed cumulatively, supported investment treatment rather than trading activity.

Conclusion: The profit from share transactions was rightly assessable under the head capital gains and not as business income, and the Revenue's challenge failed.

---