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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, JM & SHRI RAJESH KUMAR, AM
आदेश / 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:
(A.Y. 2008-09) Swati Rajeev Nadkarni, Vs. The Asst. CIT
“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.
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.”
The facts in brief are that the assessee a lady dental doctor engaged in the 3. 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.
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
(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.
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 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.
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 (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 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 (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.”
The case of the assessee is fully covered by the decision of the co- 7. 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.