IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI
BEFORE SHRI SAKTIJIT DEY, JM AND SHRI RAJESH KUMAR, AM
./I.T.A. No 4340/Mum/2012
( / Assessment Year: 2008-09)
Swati Rajeev Nadkarni 221, Asst. Commissioner of Income Tax
Gavtan Lane 2, S.V. Road, / 11 (3),
Opp. Andheri Post Office, Vs. Mumbai.
Mumbai-400 058.
. / . /PAN/GIR No. AAAPN 3547M
( /Appellant) : ( / Respondent)
/ Appellant by : Shri Vishwas V. Mehendale
/Respondent by : Shri J. Saravanan
/ : 16/12/2015
Date of Hearing
/
: 18/01/2016
Date of Pronouncement
/ O R D E R
PER RAJESH KUMAR, A. M:
This appeal by the assessee is directed against the order dated 04-06-2012 of
Commissioner of Income Tax (Appeals)-2, Mumbai (Hereinafter called as the
CIT(A)) for assessment year 2008-09. The assessee has raised the following grounds
of appeal:
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ITA No. 4340/Mum/2012 (A.Y. 2008-09)
Swati Rajeev Nadkarni, Vs. The Asst. CIT
1. "On the facts and in the circumstances of the case and in law, Hon. CIT-A-2
erred in treating Appellant's Income from Capital Gains as Business
Income.
2. On the facts and in the circumstances of the case and in law, Hon. CIT-A-2
erred in misunderstanding and misinterpreting the facts of appellant's case
and thereby erred in holding that, the appellant's Income from Capital
Gains is Business Income."
3. The facts in brief are that the assessee a lady dental doctor engaged in the
practice as dental doctor in partnership with her husband filed her return of income
on 31.07.2008 declaring an income of Rs. 27,85,570/- comprising income from
business and capital gain on sale of equity shares. The case of the assessee was
selected for scrutiny and statutory notices u/s 143(2) and 142(1) of the Act were
issued and served on the assessee.
4. During the course of scrutiny proceedings , the AO found that the assessee
had huge income from short term capital gain of Rs. 25,52,383/- and long term
gain of Rs. 1,01,948/- from shares from the sale of shares. The total sales of shares
were Rs. 1,14,98,224/- and purchases were Rs. 91,41,284/- during the year. The
AO framed the assessment order u/s 143(3) of the Act vide order dated 20.12.2010
by treating Rs. 26,54,331/- as income from business as against the STCG
Rs.25,52,383/- and long term capital gain Rs.1,01,948/- by the assessee by holding
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ITA No. 4340/Mum/2012 (A.Y. 2008-09)
Swati Rajeev Nadkarni, Vs. The Asst. CIT
that the assessee was doing trading activity and not investments as the volume of
transactions were very high.
5. At the outset, the ld AR for the assessee submitted before us that the case of
the assessee was covered in her favour by the order of Tribunal in ITA No
5684/Mum/2011 AY 2008-09 in the case of the assessee's husband which was
rendered under identical facts. The ld counsel further submitted that the facts of the
assessee were similar to that of her husband case as both of them were engaged in
practice under partnership and were doing full time practice of dentistry by
simultaneously doing the investment in shares. The ld counsel submitted that the
assessee had earned short term capital gain from one share namely Walchand
amounting to Rs. 27,03,437/- which were sold on 7th August, 8th October, 13th
November and 15th November,2007. Ultimately the ld. AR prayed that the appeal
of the assessee be allowed in views of the decision of the coordinate bench (supra)
in the case of assessee's husband. The Dr on the other hand relied on the orders of
authorities below.
6. We have heard the rival submissions and perused the materials on records.
We find that the assesseee a dental doctor by profession was engaged in practice in
partnership with her husband and were engaged in full time practice. From the
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ITA No. 4340/Mum/2012 (A.Y. 2008-09)
Swati Rajeev Nadkarni, Vs. The Asst. CIT
paper book page no. 8 we note that the assessee had made substantial gain from
one share namely "Walchand" and had earned meager gain from others and
incurred short term losses in most of the transactions. From the page no 6 we find
that the assessee had borrowed from family members Rs. 18,04,000/- for the
purpose of investment in shares. We find merit in the case of the assessee whose
main and full time job is to do practice and not share trading. The assesee had
made substantial gains from one share and if we look at the overall share
transactions, we can very safely come to the conclusion that assesee was not a
trader in shares. We also find that facts were similar in the case of her husband in
ITA No 5684/Mum/2011 AY 2008-09 .The relevant para 5 of the said decision is
extracted below:-
"After considering the overall facts and circumstances, we find
that the assessee is not devoting his full time to the share
transactions. The assessee is a dentist by his profession and is
running a clinic with his wife. He has showed income from
profession in his return of income. The assessee has gained a huge
profit relating to one scrip only. He was tempted by the upward
trend of the market in relation to the said scrip. The assesee has
consistently been treated as an investor in earlier assessment
years. Except the said one scrip of `Wall Chand', the investment
pattern of the assesee has remained the same. Only because the
assessee has gained huge profits in one scrip that does not make
the assessee a trader, especially when the assesee in the
subsequent year did not make any transaction in shares and had
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ITA No. 4340/Mum/2012 (A.Y. 2008-09)
Swati Rajeev Nadkarni, Vs. The Asst. CIT
invested the money so earned in the FDRs. When the asessee had
consistently been an investor, merely because in one year the
assesee got a chance to make profits in relation to once scrip
tempted by the growth in said scrip, that itself is not sufficient to
hold the assesee a trader. The case laws relied upon by the assesee
in the cases of "CIT vs. Ashok Wadia" (supra) and "CIT vs.
Neeraj Amidhar Surti" (supra) are squarely applicable in the case
of the assessee. We, therefore, do not find any justification on the
part of the lower authorities in treating the assessee as a trader
and assessing the income earned by the assessee on share
transactions as business income. We, therefore, set aside the
impugned order and direct the AO to assess the income earned by
the assessee from share transactions as capital gains."
7. The case of the assessee is fully covered by the decision of the co-
ordinate bench and we, therefore, by following the same set aside the impugned
order and direct the AO to assess the income earned from share transactions as
capital gain.
In the result, the assessee's appeal is allowed.
Order pronounced in the open court on 18th January, 2016.
Sd/- Sd/-
(Saktijit Dey) (Rajesh Kumar)
/ Judicial Member / Accountant Member
Mumbai; Dated :18.01.2016
Ps. Ashwini Gajakosh
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ITA No. 4340/Mum/2012 (A.Y. 2008-09)
Swati Rajeev Nadkarni, Vs. The Asst. CIT
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent
3. () / The CIT(A)
4. / CIT concerned
5. , , / DR, ITAT, Mumbai
6. / Guard File
/ BY ORDER,
/ (Dy./Asstt. Registrar)
, / ITAT, Mumbai
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