Share transactions treated as business income where borrowings, overdrafts and trading pattern supported the Tribunal's finding.

Share dealings were treated as business income because the Tribunal had material to infer trading activity rather than mere realisation of investments. Substantial borrowings, an overdraft arrangement, separate accounts, and the scale and regularity of transactions supported the finding, and the HC would not disturb it absent lack of material. The earlier assessment year did not bind later years as income-tax assessments are not governed by res judicata in that way; where fresh and materially different facts exist, the Tribunal may reach a different conclusion. The assessee therefore failed on both issues, and the share profits remained taxable as business profits.

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Issues: (i) Whether there was material to support the finding that the assessee was a dealer in shares and securities and that the resulting profits were assessable as business income. (ii) Whether, in view of the earlier assessment year's finding, it was open to the Tribunal to reach a different conclusion for the later assessment years.

Issue (i): Whether there was material to support the finding that the assessee was a dealer in shares and securities and that the resulting profits were assessable as business income.

Analysis: The governing test is whether the transactions were mere realisation of investments or were carried on as a business with the object of making profit. The Court noted that it was not sitting in appeal on facts and could interfere only if there was no material to sustain the Tribunal's finding. The Tribunal had relied on the substantial borrowings, the overdraft arrangement, the maintenance of separate accounts, the scale and regularity of the transactions, and the manner in which purchases and sales were carried out. Those circumstances furnished material on which the Tribunal could conclude that the assessee was trading in shares and securities and not merely investing capital.

Conclusion: The finding was supported by material and the answer was against the assessee.

Issue (ii): Whether, in view of the earlier assessment year's finding, it was open to the Tribunal to reach a different conclusion for the later assessment years.

Analysis: The rule of res judicata does not govern income-tax assessments in this manner. A different assessment year may be decided differently if fresh facts and materials are shown. The record before the Tribunal disclosed later and materially different circumstances from those considered for the earlier year, and therefore it was open to the Tribunal to take a different view on the later assessments.

Conclusion: It was open to the Tribunal to reach a different conclusion, and the answer was against the assessee.

Final Conclusion: The assessee failed on both questions, and the share transactions for the years in question were held taxable as business profits.

Ratio Decidendi: A finding that share transactions constitute business income will not be disturbed if there is material supporting the Tribunal's view, and a different assessment year may be decided differently where fresh facts justify a departure from an earlier year's conclusion.

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