Janashakthi Securities Ltd vs Commissioner General of Inland Revenue – CA TAX NO.10/2009-2013

The case between Janashakthi Securities Ltd and the Commissioner General of Inland Revenue, Department of Inland Revenue, Sri Lanka addressed the issue of whether income arising from the trading activities of the assessee—specifically, gains from the repurchase and reverse repurchase of government securities (Treasury Bonds and Treasury Bills)—was liable to be taxed as business profits or qualified as exempt capital gains under Section 14(2) of the Inland Revenue Act. The court held that all gains arising from such trading transactions constituted profits of a business carried on by the assessee and were accordingly liable to business tax. This decision reaffirmed the principle that the substance and frequency of transactions determine the character of income under tax law, drawing on stat