Share sale gains as business income where facts show commercial spirit and dominant intention to resell for profit.

Share gains are treated as business income where the surrounding circumstances show a commercial venture and a dominant intention to resell for profit, even if the transaction is isolated and some investment purpose is also present. The character of the transaction depends on the manner of acquisition, the assessee's conduct, the commercial setting, and the intention at purchase and sale. A single transaction can still amount to an adventure in the nature of trade. On the facts described, the Tribunal's finding that the shares were dealt with on a trading footing, funded by borrowings, and sold without pressing necessity was supported by evidence, and the contrary factual assumption adopted by the High Court was rejected.

---

---

Issues: Whether the profit arising from the sale of shares was assessable as business profit as an adventure in the nature of trade, or as capital gain arising from realisation of an investment.

Analysis: The character of a share transaction depends on the facts and circumstances, including the manner of acquisition, the assessee's conduct, the surrounding commercial setting, and the intention with which the shares were acquired and sold. A single transaction may still amount to an adventure in the nature of trade; repetition is not essential. The Tribunal's finding that the assessee had dealt in shares in a commercial spirit, had authorised the purchase and sale by resolution, had treated related share losses and devaluation on a trading footing, had acquired the shares with borrowed funds, and had sold them without any pressing necessity, was supported by evidence and applied the correct legal test. The High Court erred in substituting its own factual assumption that the purchase was merely to assist a sister concern.

Conclusion: The profit was rightly treated as business income arising from an adventure in the nature of trade, and the assessee was not entitled to treat it as a capital receipt.

Ratio Decidendi: Where the surrounding circumstances show that shares were acquired and sold in a commercial spirit with a dominant intention of resale for profit, the resulting gain is taxable as business profit even if the transaction is isolated and even if the assessee also had some investment-related purpose.

---