Share sale gains treated as capital gains where shares were held as investment, not stock-in-trade.

Surplus from sale of shares was treated as capital gains because the assessee had classified the shares as investment, the volume of transactions was limited, and the gains were predominantly long-term with only a negligible short-term component. These factual indicators supported the view that the shares were held as investment rather than stock-in-trade. The Court also referred to the CBDT circular stating that, subject to conditions, listed shares held for more than 12 months may be accepted as giving rise to capital gains. On that basis, the receipt was rightly assessed as capital gains, not business income, and no substantial question of law arose.

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Issues: Whether the surplus arising from sale of shares was to be assessed as business income or as capital gains.

Analysis: The assessee had treated the shares as investment, the number of transactions was not large, and the dominant part of the gain was long-term capital gain, with only a negligible short-term component. These facts supported the conclusion that the shareholding was held as investment rather than as stock-in-trade. The Court also noted the CBDT circular indicating that, subject to conditions, listed shares held for more than 12 months may be accepted as giving rise to capital gains.

Conclusion: The receipt from sale of shares was rightly treated as capital gains and not business income.

Final Conclusion: No substantial question of law arose, and the Revenue's appeals were dismissed.

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