Notwithstanding Loan at High Rate of Interest, Share capital Gain cannot be assumed as Business Profit and will be treated as Capital Gains

Notwithstanding Loan at High Rate of Interest, Share capital Gain cannot be assumed as Business Profit and will be treated as Capital Gains

Case: Commissioner of Income-Tax v NIRAJ AMIDHAR SURTI

Merely because the shares had been purchased from borrowed funds obtained on high rate of interest would not change the nature of the transaction from investment to one in the nature of an “adventure in the nature of trade.

A capital investment and resale do not lose their capital nature merely because the resale was foreseen and contemplated when the investment was made and the possibility of enhanced values motivated the investment.

It was held by the Gujarat High Court that the character of the transaction in question to be one of capital gain and not an adventure in the nature of business or trade and cannot be construed as business profits but to be assessed as capital gains.