TaxTMI 
TaxTMI 
2017 (9) TMI 1395
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....cts of the case are that the assessee who is a dermatologist by profession had filed her return of income declaring total income of Rs. 1,79,73,930/- on 31.03.2012, which was processed as such under Section 143(1) of the 'Act'. The case of the assessee was thereafter taken up for scrutiny proceedings under Section 143(2). 3. That during the course of the assessment proceedings the A.O observed that the assessee had reflected a 'Long term capital loss' (LTCL) of (Rs. 47,63,844) and a 'Short term capital gain' (STCG) of Rs. 2,07,71,688/- on sale of shares in her return of income. The A.O. being of the view that the assessee was a trader of shares and not an investor, therefore called upon the assessee to show cause as to why the income from the share transactions may not be assessed as her business income. The assessee to support her claim that the profit/loss of the shares had rightly been shown under the head capital gains in the return of income, therein submitted that she was a dermatologist by profession and not in the business of purchase/sale of shares. It was further submitted by the assessee that she had made investment in scrips which had a growth in intrinsic value, year ....
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....me set of facts during the year under consideration, thus could not be sustained in the eyes of law. 4. The assessee further to fortify her contention that the sale of shares had rightly been reflected by her under the head 'Capital gains', therein relied on the Judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Gopal purohit (2011) 336 ITR 0287 (Bom). The assessee in order to impress upon the A.O. that the case of the assessee was factually identical with the facts in the case of Gopal Purohit (supra), therein submitted a 'Chart' revealing the common Facts as under :- Comparative facts of the case Sr. No. Particulars Gopal Purohit Amrita Pankaj Talwar 1 Borrowed Funds Rs.3.39 Crores (page No. 5 of the Order) No interest bearing Borrowed Fund from outsiders. The loan taken from Pankaj Talwar (Husband of the Assessee) during the earlier year. 2 Infrastructure Minimum, in The form of office, Employees, equipments, Etc. Residence is used for activity and part time clinic premises for profession. 3 Dividend Rs.15 lacs (page No. 5 of the Order) &nb....
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....e disposing of the appeals of the assessee for A.Ys. 2005-06, 2006-07 and 2007-08, therein observed that though the profit on the sale of shares reflected by the assessee under the head LTCG was consistently accepted as such, but however the same shown under the head STCG was held to be assessed as 'business income'. The CIT(A) however being of the view that the facts involved in the year under consideration, viz. A.Y. 2010- 11 were substantially distinguishable as against those involved in the aforementioned preceding years, thus did not subscribe to the aforesaid view of his predecessors by observing as under:- "Further from facts it cannot be said that in this year, the assessee was actively involved in large scale transactions with high frequency of purchase and sale of shares of various companies on regular basis during the current year since the holding periods are substantially longer than that in earlier years. The assessee has also earned substantial dividend exceeding Rs. 24.61 lacs during the year which is about 1.5% of investments. The turnover Rs. 7.61 Crores also cannot be said to be high as compares to the size of investments Rs. 15.66 crores on 31.03.2010 and Rs. ....
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....er a critical analysis of the transactions of the assessee would show that the assessee has dealt with 24 scrips, 27 scrips, 26 scrips and 17 scrips respectively in the years relevant to the assessment years 2005-06, 2006-07, 2008-09 and 2009-10. We have earlier noticed that the assessee has purchased each shares in high quantities and hence the volume of transactions was seen at higher figure. With regard to holding period, we have seen that the assessee has held shares in varying periods ranging from one week to nine months. Hence the average holding period was reasonably good. The repetition of transactions were very minimal, i.e, upto a maximum of four transactions only. The assessee has not borrowed funds for purchasing the shares. The assessee has held major shares for more than one year and has declared long term capital gains. We notice that the Assessing Officer has ignored all other factors, which are in favour of the assessee and has decided the issue against the assessee by considering only two factors. We have seen that even the two factors that were considered by the assessing officer works out in favour of the assessee only. Hence, in our view, the decision taken by ....
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.... fact having been brought to our notice in respect of the order of the CIT(A) for the year under consideration, therein find no reason to take a different view. We thus in light of our aforesaid observations uphold the order of the CIT(A) in respect of the issue under consideration. The appeal filed by the revenue is thus dismissed. ITA NO. 5200/MUM/2014 10. We now take up the appeal of the assessee, wherein the latter had assailed the order of the CIT(A) on the following grounds:- "1 i. The Learned Commissioner of Income Tax (Appeals) erred in confirming the addition made by the Assessing Officer in respect of disallowance under section 14A r.w.r. 8D of Income Tax Ac t,1961 amounting of Rs. 8,76,258/- as expense s incurred in earning exempt income. Your appellant submits that she had not incurred any expense in earning exempt income and the disallowance u/s 14A ought to be deleted. ii. The Learned Commissioner of Income Tax (Appeals) failed to c on s ide r, that the learned A.O had not provided an y explanation or justification for the nonsatisfaction of the claim of the appellant in not incurring any expenditure in relation to earning exempt income. iii. The Learned Com....
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..... 10. We have given a thoughtful consideration to the facts of the case and find ourselves to be in agreement with the contention of the assessee that the very process of determination of the amount of expenditure incurred in relation to exempt income would be triggered, only if the A.O. returns a finding that he is not satisfied with the correctness of the claim of the assessee in respect of such expenditure. We are of the considered view that it is only if the A.O. is not satisfied with the correctness of the claim of the assessee that no expenditure had been incurred in relation to the exempt income, therein only after recording cogent reasons as regards the same, that the A.O. can therein embark upon the determination of the amount of expenditure in accordance with the method prescribed in Section 14A r.w. Rule 8D. We are of the considered view that our aforesaid view stands fortified by the recent judgment of the Hon'ble Supreme Court in the case of : Godrej & Boyce Manufacturing Company Limited (supra), wherein the Hon'ble Apex Court had held as under:- "Whether such determination is to be made on application of the formula prescribed under Rule 8D or in the best judgment ....