Share sale surplus treated as capital gains where investment activity, not trading, was supported by the factual record.

Surplus from sale of shares is analysed as capital gains rather than business income where the assessee functions as an investment company, the share transactions form less than ten per cent of total holdings, and the shares were held for a fairly long period before sale. The text emphasises that such sales may amount only to a variation of investments, not an organised business of dealing in shares. It also states that the character of the receipt is a mixed question of law and fact, so factual inferences supported by the record will not be disturbed in reference jurisdiction absent perversity.

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Issues: Whether the surplus realised on sale of shares was assessable as business income or as capital gains.

Analysis: The Tribunal's finding that the assessee was functioning as an investment company, that the share transactions were less than ten per cent of its total holdings, and that the shares had been held for a fairly long period before sale supported the conclusion that the transactions were only a variation of investments and not an organised business of dealing in shares. The question whether the receipt was capital or revenue was treated as one of mixed law and fact, and the High Court declined to reappreciate the evidence in reference jurisdiction or to disturb the Tribunal's factual inference in the absence of perversity.

Conclusion: The amount realised on sale of the shares was not business income and was, if at all, assessable as capital gains, in favour of the assessee.

Ratio Decidendi: Where an investment company merely changes its investments and the factual inference of the Tribunal is reasonably supported by the record, sale proceeds of shares are capital receipts and not trading profits.

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