Case Law Details
Shri Srinivasa Reddy Yenumula Vs ITO (ITAT Hyderabad)
As regards the addition of Rs.18.00 lakhs towards unexplained investment is concerned, the learned Counsel for the assessee placed reliance on the judgment of the Hon’ble Supreme Court of India in the case of CIT vs. Bharat Engg. & Construction Co. reported in (1972) 83 ITR 0187 wherein the Hon’ble Supreme Court held that the unexplained cash credit entries in the first year of its business represents capital receipts and could not be its income.
Admittedly, this is the first year of operation of the assessee and the assessee could start the business only after obtaining license from the Govt. and by making payment of the license fee. The assessee has made the payment of Rs.18.00 lakhs towards the first instalment of the license fee and therefore, such an amount cannot be treated as unexplained income from the business of the assessee. This is the capital introduced by him and if at all, it can only be the income from the earlier years and not from the relevant previous year. Therefore, respectfully following the judgment of the Hon’ble Supreme Court, we delete the addition of Rs.18.00 lakhs.
FULL TEXT OF THE ITAT JUDGMENT
This is assessee’s appeal for the A.Y 2009-10 against the order of the CIT (A)-2, Hyderabad, dated 31.03.2016. The assessee has raised the following grounds of appeal:
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