Share trading versus investment is judged on overall conduct, and prior year findings do not bar fresh tax scrutiny.

Share dealings are characterised by the totality of circumstances, including frequency, volume, manner of dealing, account treatment, and use of funds. On the facts described, substantial and repeated purchases and sales of shares and securities, together with organised trading features, supported treatment of the activity as a business rather than mere realisation of investment; the resulting profits were assessable as business income. Income-tax proceedings are not governed by strict res judicata, so an earlier year's view did not prevent examination of later years on their own facts. The later assessment could therefore be made afresh on the evidence available.

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Issues: (i) Whether the assessee's purchase and sale of shares and securities amounted to trading activity assessable as business profits rather than mere realisation of investment resulting in capital accretion; (ii) Whether the Tribunal was precluded from reaching that finding because of its earlier view in respect of an earlier assessment year.

Issue (i): Whether the assessee's purchase and sale of shares and securities amounted to trading activity assessable as business profits rather than mere realisation of investment resulting in capital accretion.

Analysis: The nature of the transactions had to be determined from the magnitude, frequency, manner of dealing, maintenance of accounts, ratio of sales to purchases, and the surrounding circumstances. On the facts, the assessee engaged in substantial and repeated dealings in shares and securities, maintained separate investment accounts, and used borrowed funds as well as his own surplus in a manner consistent with organised trading. The principle applied was that a mere realisation of an ordinary investment does not create taxable income, but transactions carried on as part of a business do. The earlier non-taxation of some sales did not control the later years where the scale and character of dealings materially differed.

Conclusion: The assessee was rightly treated as a dealer in shares and securities, and the profits were assessable as business income, against the assessee.

Issue (ii): Whether the Tribunal was precluded from reaching that finding because of its earlier view in respect of an earlier assessment year.

Analysis: Income-tax proceedings do not attract the strict rule of res judicata. A finding for one year does not prevent the authority from examining later years on their own facts, especially where the material on record shows a different volume and character of transactions. The Tribunal was therefore entitled to consider the assessee's later activities afresh and draw a conclusion from the evidence before it.

Conclusion: The Tribunal was not barred from making the impugned finding, against the assessee.

Final Conclusion: The appeals failed because the evidence supported the conclusion that the share transactions constituted a business and the prior year's position did not foreclose assessment in the years in question.

Ratio Decidendi: In income-tax matters, the character of share dealings as investment or trading is determined by the totality of circumstances and may be treated as business income where the transactions show organised, repeated, and substantial trading activity; prior findings for an earlier year do not operate as res judicata.

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