Share transaction classification turns on investment intention and conduct; absent proof of change, gains were treated as business income.

Profits from share transactions depend on the factual indicators of trading or investment, including frequency, volume, holding period, source of funds, books of account and, above all, the intention at the time of purchase as shown by the assessee's conduct. A taxpayer may maintain separate investment and trading portfolios, but must still produce evidence that the relevant transactions were intended as investments. On the record, there was no material to show a shift from trading to investment, and the earlier treatment of the shares as trading assets supported the Revenue's case. The circular permitting two portfolios did not remove the need to prove investment intention, so the income was treated as business income.

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Issues: Whether the profits from share transactions were to be assessed as business income or as short-term capital gains.

Analysis: The nature of income from share transactions depends on the facts of each case and no single factor is conclusive. Relevant factors include frequency, volume, holding period, source of funds, entries in the books, and, most importantly, the intention at the time of purchase, which must be gathered from the assessee's conduct. Though a taxpayer may maintain separate investment and trading portfolios, the assessee must produce evidence showing that particular transactions were intended as investments. On the record, there was no material to support a change from trading to investment, and the earlier treatment of the shares as trading assets reinforced the revenue's case. The circular permitting two portfolios did not dispense with the need for proof of investment intention.

Conclusion: The share transactions were held to be trading transactions and the resultant income was taxable as business income, against the assessee and in favour of the Revenue.

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