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2019 (1) TMI 1636 - AT - Income TaxCorrect head of income - Income earned from sale and purchase of share - STCG OR business income - Whether considering the magnitude, intention, frequency of transactions which reflects modus operandi of assessee of share business as an adventure in the nature of trade? - HELD THAT:- As observed that the assessee is maintaining the details/records of purchase/sale of equity shares as if it is running a business. It is consistently maintaining the books of account showing the details of equity shares under the head opening stock, closing stock, purchases & sales and gross profit which is a regulars real feature of showing the business transactions. Normally there is no requirement to get audited the gain/loss from purchase and sale of equity shares claimed under the head short term capital gain by an auditor but the assessee has disclosed all the transactions relating to equity shares under the head profit and loss account and got it certified by the auditor. Frequency of transactions also plays vital role in examining taxability of such transactions. Though it is pleaded that the assessee is a very busy Doctor engaged in the professional work but what transpires from the records is that the assessee is devoting his time and knowledge for regular purchase and sale of equity shares round the year. Even otherwise there is no Estoppel by law on the assessee to carry more than one business or profession. There are innumerable instances where a particular individual carries on multiple businesses from multiple locations then why cannot the assessee. The situation in the case of assessee seems to be different because assessee is keeping continuous watch on the share market. He selects various scripts for regular purchase and sale and he is also engaged in the future and option market. Hundreds of transactions have been entered with the same brokers for purchase/sale. No separate demat account have been kept by the assessee relating to the alleged investment in equity shares and profit and sale from share trading and future and option. In these given facts it is hard to believe that such gain from such magnitude of transactions can be taxed under the head of short term capital gain. AO was fair enough to give the benefit of exemption for the long term capital gain but as regards the alleged income we find merit in the finding of Ld. AO and are inclined to hold that the alleged income of is purely income from business from purchase/sale of shares and therefore, is to be taxed as a business income. We, therefore, allow the grounds raised by the revenue and dismiss the ground no.1 raised in the cross objection filed by the assessee. Disallowance u/s. 14A - HELD THAT:- In the absence of such satisfaction on the part of the assessing officer as well as the fact that the assessee has not claimed any expenditure in the profit and loss account to earn the exempted income we find that the judgment of Coordinate Mumbai Bench in the case of ACIT vs. Sachin R. Tendulkar [2017 (1) TMI 1339 - ITAT MUMBAI] is squarely applicable on the assessee wherein it was held that “ as no expenses were claimed in the profit and loss account attributable to the earning of exempt income, therefore no disallowance is called for u/s 14A of the Act r.w. Rule-8D. No disallowance was called for u/s 14A by the assessing officer. We therefore, set aside the finding of the Ld. CIT(A) and delete the disallowance made by the assessing officer byway invoking provision of section 14A of the Act. Thus, ground no.2 of the cross objection filed by the assessee is allowed.
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