Tribunal grants appeal, sends expense, membership fee, depreciation issues back for fresh review.

The Tribunal allowed the appeal of the assessee for statistical purposes, restoring the issues of ad hoc disallowance of expenses, disallowance of Membership fee, and depreciation claim on the media library (excluding the revalued portion) to the Assessing Officer for fresh examination, ensuring the assessee had the opportunity to present adequate evidence.

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Issues Involved:
1. Legality and correctness of the order passed by the Commissioner of Income Tax (Appeals).
2. Ad hoc disallowance of various expenses by the Assessing Officer.
3. Disallowance of 50% of the Membership fee on American Express Credit Card.
4. Disallowance of depreciation claimed on Fixed Assets (Media Library).

Issue-wise Detailed Analysis:

1. Legality and Correctness of the Order Passed by the Commissioner of Income Tax (Appeals):
The assessee challenged the order passed by the Commissioner of Income Tax (Appeals)-6, New Delhi, asserting that it was "bad at law, wrong in facts and against the principles of natural justice." However, this general ground was not pressed further and did not require adjudication.

2. Ad Hoc Disallowance of Various Expenses by the Assessing Officer:
The Assessing Officer disallowed various expenses on an ad hoc basis, including staff welfare, business promotion, telephone, traveling, vehicle running, vehicle depreciation, vehicle insurance, and servant salary expenses. The disallowance was made due to the absence of logbooks, invoices, or vouchers to substantiate these expenses. The Commissioner of Income Tax (Appeals) upheld the disallowance, stating that the personal nature of the expenses could not be ruled out and that the expenses were not fully verifiable. The Tribunal, however, noted that such disallowances should not be made on an ad hoc basis without pointing out specific defects in the claims. Consequently, the issue was restored to the Assessing Officer for a fresh examination, providing the assessee an opportunity to present adequate evidence.

3. Disallowance of 50% of the Membership Fee on American Express Credit Card:
The Assessing Officer disallowed 50% of the Membership fee on the American Express Credit Card, amounting to Rs. 55,150/-, due to the absence of details justifying the business purpose of the expenses incurred through the credit card. The Tribunal found that the disallowance was made on an ad hoc basis without specific evidence that the expenses were not for business purposes. Therefore, this issue was also restored to the Assessing Officer for reconsideration, ensuring the assessee could provide adequate evidence.

4. Disallowance of Depreciation Claimed on Fixed Assets (Media Library):
The assessee claimed depreciation of Rs. 1,13,65,036/- on fixed assets of the media library, which included revalued stock converted into capital assets in the financial year 2006-07. The Commissioner of Income Tax (Appeals) followed the Tribunal's previous order for the assessment year 2007-08, which rejected the claim of depreciation on revalued assets, stating that the revaluation was done to window-dress the balance sheet and had no tax implications. The Tribunal upheld that the assessee could not claim depreciation on the revalued amount of Rs. 3,19,95,890/- but allowed the possibility of claiming depreciation on the balance amount if it met the conditions of Section 32 of the Income Tax Act. The issue was restored to the Assessing Officer for examination of the depreciation claim on the amount other than the revalued portion.

Conclusion:
The Tribunal allowed the appeal of the assessee for statistical purposes, restoring the issues of ad hoc disallowance of expenses, disallowance of Membership fee, and depreciation claim on the media library (excluding the revalued portion) to the Assessing Officer for fresh examination, ensuring the assessee had the opportunity to present adequate evidence. The decision was pronounced in the Open Court on 10th December 2018.

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