Dismissing the appeal of the revenue the Court held that ; The five tests whether the income bears the character of business income or capital gains are : (1) whether the company or concern is authorised in its memorandum of constituting documents to deal with shares ; (2) whether the entity had shown the shares under the head “investment” ; (3) whether the assessee utilised its own funds and had not shown borrowed funds for the purpose of acquiring shares ; (4) the nature of infrastructure, whether it is small represents investment activity rather than the trading activity that would require larger infrastructure ; (5) whether the behaviour of the assessee is such as to disclose income/earning has objective, i. e., “obtaining dividend” rather than trading. Applying the above tests the Court held that ; Profit earned on sale of Shares or Units of Mutual Funds was held to be assessable as capital gains . ( AY. 2005 -06)