Share sale profits treated as capital gains where delivery-based investment activity and past acceptance showed investor character.

Profit from sale of shares was held to be assessable as capital gains because the shares were treated as investments, were held for substantial periods, and were transferred with actual delivery. Consistent acceptance of the same treatment in earlier assessment years on similar facts supported the investor character of the transactions, and no material change was shown to justify a different view. The profit was therefore rightly assessed as capital gains and not business income in favour of the assessee.

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Issues: Whether the profit from sale of shares was to be assessed as capital gains or as business income.

Analysis: The shares sold during the year were found to have been held as investments, with substantial holding periods and actual delivery. The same treatment had been accepted in the immediately preceding assessment years under Section 143(3) of the Income-tax Act, 1961 on similar facts. The Revenue did not establish any material change in facts to justify a different view for the year under consideration, and the assessee's conduct was consistent with that of an investor rather than a trader.

Conclusion: The profit on sale of shares was rightly assessed as capital gains and not business income, in favour of the assessee.

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