Classification of share transactions as capital gains or business income requires fuller factual scrutiny under portfolio-based tests.

Short-term capital gains from share transactions were examined against the test for classification as business income, with the record showing a limited number of scrips, low frequency, and separate investment and trading portfolios. The analysis also reflected the Board's circular recognising that an assessee may maintain two portfolios and the relevant administrative instruction on determining the character of share activity. Although the material suggested investor-like conduct, the linkage between share dealings, day trading, speculation, derivatives, and investment activity required fuller factual scrutiny. The issue was therefore remanded to the Assessing Officer for fresh examination, including consideration of the preceding years and the prescribed tests.

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Issues: Whether the short-term capital gains from share transactions were to be assessed as business income or the matter required fresh examination by the Assessing Officer.

Analysis: The assessee's transactions showed a limited number of scrips and comparatively low frequency, with the record indicating a pattern similar to the preceding year and the existence of separate investment and trading portfolios. The Board's circular recognising the possibility of two portfolios and the relevant administrative instruction on determining the nature of share activity were taken into account. On the facts as placed, the material suggested investor-like conduct, but the correlation between the share transactions, day trading, speculation, derivatives, and investment activity required re-examination on a fuller factual record.

Conclusion: The issue was not finally decided on merits; the matter was remanded to the Assessing Officer for fresh examination after considering the preceding years and applying the prescribed tests.

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