Share-dealing profit on resale taxed as revenue income where purchases formed part of a profit-making venture.

Share purchases made in the course of an existing share-dealing activity were treated as stock-in-trade, not a mere capital investment. The surrounding circumstances, including the profit-making character of the transaction, the sale after about a year, and the assessee's prior dealings in shares, supported the inference that the surplus on resale was revenue income. The contrary Tribunal finding that the purchase was solely for acquiring managing agency had no reliable basis on the record and was rejected. The surplus was therefore taxable as revenue income and not a capital receipt.

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Issues: Whether the surplus realised on sale of shares was revenue income chargeable to tax or a capital accretion.

Analysis: The shares were purchased and held in the context of the assessee's share-dealing activity and not as a mere capital investment. The surrounding circumstances showed that the transaction was undertaken as a profit-making venture, and the sale after about a year, together with the assessee's prior conduct in share dealings, supported the inference that the shares constituted stock-in-trade. A finding of the Tribunal that the purchase was solely for acquiring managing agency was held to have no reliable basis on the record and was disregarded.

Conclusion: The surplus on sale of the shares was revenue income and was rightly brought to tax.

Final Conclusion: The reference was answered in favour of the Revenue and the assessee's contention that the amount was a capital receipt was rejected.

Ratio Decidendi: Where share purchases are part of a profit-making venture connected with an existing share-dealing business, the surplus on resale is taxable as revenue income rather than capital accretion.

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