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Swati Rajeev Nadkarni 221, Gavtan Lane 2, S.V. Road, Opp. Andheri Post Office, Mumbai-400 058. Vs. Asst. Commissioner of Income Tax 11 (3), Mumbai.
January, 21st 2016


                     ./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

      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:
                                               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

      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
                                                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
                                                   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
                                                      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
                                   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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