Share transaction profits treated as capital gains where shares were held as investments and trades were delivery-based.

Share transaction gains were treated as capital gains, not business income, because the assessee consistently reflected the shares as investments, the trades were delivery-based, and a separate investment portfolio was maintained. The Tribunal accepted that a taxpayer may hold both investment and trading portfolios, and relied on the surrounding circumstances and the assessee's own earlier case to determine the character of the holdings. Mere frequency or volume of transactions was not decisive. On those facts, the profit from the share dealings was assessable as short-term capital gain.

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Issues: Whether profit arising from share transactions was assessable as business income or as short-term capital gain.

Analysis: The Tribunal noted that the assessee had shown shares as investments in the balance sheet, the transactions were delivery-based, and the existence of a separate investment portfolio was consistent with the recognised position that a taxpayer may maintain both investment and trading portfolios. It also relied on the earlier decision in the assessee's own case on identical facts and on the CBDT's guidance that the character of share holdings depends on the assessee's treatment and surrounding circumstances, and that frequency of transactions alone is not ative.

Conclusion: The profit on share transactions was held to be capital gain and not business income, in favour of the assessee.

Ratio Decidendi: Where shares are consistently treated as investments, held through delivery-based transactions, and the surrounding circumstances support an investment portfolio, the resulting gain is assessable as capital gain and not as business income merely because of transaction frequency or volume.

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