Taxable revenue profit arises on sale of shares and securities when disposals are integral to the business, not mere investment changes.

Surplus on sale of shares and securities is taxable as revenue income where the assessee-company's real business involves dealing with those holdings in the ordinary course of financing, promoting, managing, or acquiring control over allied concerns. The decisive test is the nature of the business actually carried on, not merely the objects in the memorandum. On the stated facts, the company varied its holdings to fund fresh acquisitions and corporate control, so the sales were an integral incident of business rather than a mere change of investment. The gain was therefore rightly assessable as taxable income.

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Issues: Whether the surplus realised by the assessee-company on the sale of shares and securities was taxable income.

Analysis: The company's memorandum authorised it to act as financiers, promoters, managers and managing agents, but the decisive factor was the nature of the business actually carried on. The factual findings showed that the company did not merely hold investments passively. It varied its holdings to finance allied concerns, to acquire controlling interests, and to further its business interests as promoter and managing agent. The sales of securities were made to provide funds for fresh acquisitions and corporate control, and were therefore not mere realisations of capital assets or a simple change of investment. Where the sale of securities is a normal step in carrying on the business, or is done in what is truly the carrying on of that business, the resulting gain is taxable as revenue profit.

Conclusion: The surplus realised on the sale of shares and securities was taxable income and was rightly assessable.

Ratio Decidendi: Gains on sale of investments are taxable when the realisation is an integral or normal incident of the assessee's business and is effected in the ordinary course of carrying on that business, rather than as a mere change of investment.

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