Share transactions treated as investment supported capital gains assessment, not business income, where consistent past treatment was accepted.

Consistent treatment of share transactions as investments supported assessment under the head of capital gains rather than business income, because the assessee had treated the shares as investment in earlier and subsequent years and the Department had accepted that position. No distinguishing material was shown for the year in question, so the same characterisation applied to both the long-term capital gain and the short-term capital loss. The share transactions were therefore to be assessed as capital gains/loss and not as trading income.

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Issues: Whether long-term capital gain and short-term capital loss from share transactions were to be assessed as business income or as capital gains/loss.

Analysis: The assessee had consistently treated the shares as investment in earlier and subsequent assessment years, and the Department had accepted the resulting income or loss under the head of capital gains. No distinguishing material was shown for the year under consideration. In such circumstances, the consistent pattern of treatment supported assessment of the share transactions as investment activity rather than trading activity.

Conclusion: The share transactions were to be assessed under the head capital gains and not as business income. The issue was decided in favour of the assessee.

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