Gain on sale of shares to be treated as capital gain and not business income, despite large volume of sales

Recently, the Mumbai Bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of ACIT Vs. Naishadh V. Vachharajani (I.T.A. No. 6429/Mum/2009) held that income on sale of shares is assessable under the head “Capital Gains” and not “Business Income” since the intention of the taxpayer was to hold the shares as an investment and not as stock-in-trade.

Further, the Tribunal held that the mere magnitude of transactions does not change the nature of transactions, which are being assessed as income from Capital Gains in the past several years.

Facts of the case

• The taxpayer, a marine consultant, has investment in shares.

• The taxpayer also has income from speculative profit and Future Option trading in shares.

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