Capital gains treatment for listed share sales upheld where transactions were not shown to be sham or bogus.

Income from sale of listed shares was treated as capital gains, not business income, because the assessee's treatment of the transactions was accepted under CBDT Circular No. 6 of 2016 and the Revenue did not show the trades to be sham or bogus. The Tribunal's finding stood since the material relied on by the Revenue created only suspicion and did not displace the conclusion that the share-sale receipts were capital gains. The circular applied to the transactions in question, and the classification as business income was rejected.

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Issues: Whether income arising from sale of shares was to be assessed as capital gains or business income, and whether the CBDT circular governing such classification applied to the transactions in question.

Analysis: The Tribunal had treated the share-sale receipts as capital gains by relying on CBDT Circular No. 6 of 2016 dated 29.02.2016, which recognises the assessee's stated treatment of listed shares and securities, subject to the exception where the genuineness of the transaction itself is questionable. The transactions were not shown to be sham or bogus. The material relied on by the Revenue, at best, created suspicion and did not displace the Tribunal's finding that the receipts were not taxable as business income.

Conclusion: The income from sale of shares was correctly treated as capital gains and not business income; the Revenue's appeal failed.

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