DY. COMMISSIONER OF INCOME TAX DEHRADUN, UTTARAKHAND vs. BAKER HUGHES ASIA PACIFIC PTE. LTD, MAHARASHTRA

ITA No.214/DDN/2025 BAKER HUGHES ASIA PACIFIC PTE. LTD.

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “DB” NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER ITA No.214/DDN/2025 Assessment Year: 2020-21 DY. COMMISSIONER OF INCOME TAX, Vs. BAKER HUGHES ASIA PACIFIC PTE. 13-A, Subhash Road, Aayakar LTD., Bhawan, Income Tax Office, Unit No.203, 2nd Floor, Reliable Dehradun 248001, Uttarakhand. Tech Park, Navi Mumbai 400708. PAN No. AACCB3714F Appellant Respondent

Assessee by Shri Amit Arora, CA & Shri Vishal Mishra, CA Revenue by Written Application (Vijyanand Bhartiya)

Date of hearing: 24.06.2026 Pronouncement on 08.07.2026 O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER: 1. This appeal arises from order dated 30.07.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), by Ld. CIT(A), Noida-2. This appeal is filed by the Revenue who have challenged the action of Ld. CIT(A) in granting relief on ad hoc disallowances pertaining to store and consumables, employee benefit expenses and training expenses. These additions had been made on an ad hoc basis by the Ld.

ITA No.214/DDN/2025 BAKER HUGHES ASIA PACIFIC PTE. LTD. AO, which were deleted by the Ld. CIT(A) on the basis of finding given on page 33 (para 8.4.4) of the impugned order.

1.1 The Revenue is aggrieved with this action and has approached the ITAT with grounds challenging this relief given by the Ld. CIT(A).

2.1 The Ld. AR, on the other hand, has stated that for AY 2019-20 the ITAT has granted relief to the assessee on these very same grounds [ITA No.213/DDN/2025, order dated 10.04.2026]. The Ld. AR placed on record a copy of this order and relied on the same.

“8.4.4 I have carefully gone through facts of the case, submissions of the appellant and case laws relied upon by the appellant. It is a fact that the AO has not disputed the audit report of the statutory auditor. The AO made ad-hoc disallowances out of certain expenses.

ITA No.214/DDN/2025 BAKER HUGHES ASIA PACIFIC PTE. LTD. In respect of stores and consumables, the AO has only referred the submission of the appellant assessee that the contract with Vedanta Limited was majorly for supply of material for which prices were agreed in advance and concluded that expenses in this regard would be very less. In respect of employee benefit expenses, the AO has simply mentioned that the appellant had failed to prove as to why the employees were required for undertaking sale contract. In respect of training expenses, the AO has noted that the appellant has failed to prove as to why training was needed for undertaking sale contract. It is matter of fact that the AO in the assessment order has not pointed out that any part of the expenditure in question is either bogus, non-genuine or fictitious nor it has been at any place brought on record that the expenses incurred by the appellant are not wholly and exclusively for the purpose of business; especially in view of the fact that the AO has not rejected the financial statements of the appellant. There are no clear findings as to the number of bills and vouchers requiring denial of allowance with the amount of expenditure and nature of defect therein or therewith. The AO has failed to mention any rationale in arriving at the percentage of disallowance. It is an established fact that the AO cannot step into the shoes of the appellant and decide as to what expense should be incurred and what not and how the business should be run. It is the prerogative of the assessee to decide as to how the business should be run in order to earn profit. Without establishing any specific defect, the AO cannot disallow the expenses just on the basis that the taxpayer has failed to prove the need for incurring such expenses. The case laws quoted by the appellant as above, affirm the aforesaid view. 8.4.5 In view of the above discussion, ad-hoc disallowances of Rs.34,01,60,824/-, Rs.75,26,756/- and Rs.1,89,199/- in respect of stores and consumables, employee benefit expenses and training expenses respectively made by the AO are held to be not sustainable. Consequently, additions made on account of such disallowances are deleted. The grounds of appeal are allowed in favor of the appellant.” The relevant portion from the ITAT’s order (supra) is as under: -

“2. Suffice to say, the Revenue's sole substantive ground raised in the instant appeal seeks to reverse the CIT(A)'s action accepting the assessee's corresponding substantive grounds directed against the Assessing Officer's assessment findings dated 26.11.2021

ITA No.214/DDN/2025 BAKER HUGHES ASIA PACIFIC PTE. LTD. disallowing its various expenses on ad-hoc basis @ 20% to 50% vide following detailed discussion. ………………………. 3. It is in this factual backdrop that the learned departmental representative vehemently argues in support of the Revenue's substantive grounds raised herein that the Assessing Officer had rightly invoked the impugned ad-hoc disallowance of the assessee's expenses claims in issue on account of its failure in substantiating the same during the course of scrutiny assessment. We note in this factual backdrop that the assessee's financial statements stood duly accepted as noticed in the CIT(A)'s lower appellate discussion. And also that the Assessing Officer nowhere quoted any specific default on its part so as to conclude that the corresponding supportive evidence had remained uncompleted and unproved; as the case may be. We thus find no reason to interfere with the learned CIT(A)'s detailed discussion deleting the impugned disallowance made by the Assessing Officer in the hands. Rejected accordingly.” We can do no better than to respectfully follow the ITAT’s order and confirm the relief given to the assessee.

Order pronounced in the open court on 08.07.2026

Sd/- Sd/- (ANUBHAV SHARMA) (SANJAY AWASTHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 08.07.2026 *Kavita Arora, Sr. P.S. 4

ITA No.214/DDN/2025 BAKER HUGHES ASIA PACIFIC PTE. LTD. Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI