BAE Systems (Operations ) Limited, Hampshire, UK DCIT, CPC, Bangalore

Last updated: 21 December 2020

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BAE Systems (Operations) Ltd., a UK-based company, appealed to the Income Tax Appellate Tribunal regarding the denial of TDS credit amounting to Rs. 1,14,17,141 for the assessment year 2017-18. The company, which provides services to Hindustan Aeronautics Limited, follows a mercantile accounting system. While BAE Systems offered a portion of its revenue to tax in AY 2017-18, the TDS was deducted by Hindustan Aeronautics Limited on the entire revenue in AY 2018-19.

Court :
ITAT New Delhi

Brief :
Aggrieved by the order dated 21/11/2019 by the learned Commissioner of Income Tax (Appeals), Delhi-42 (“Ld. CIT(A)”) in not granting TDS credit ofRs. 1,14,17,141/- for the assessment year 2017-18, BAE Systems (operations) Ltd (“the assessee”), preferred this appeal.

Citation :
ITA No.-442/Del/2020

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: ‘D’ NEW DELHI

BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER
&
SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER
ITA No.-442/Del/2020
(Assessment Year: 2017-18)

BAE Systems (Operations) Ltd.,
PO Box 87, WARWICK HOUSE,
FARNBOROUGH, AEROSPACE
CENBTE, FARNBOROUGH,
HAMPSHIRE, GU146YU, UNITED
KINGDOM
PAN No. AADCB0296M
Appellant

Vs.

DCIT
CENTRALIZED PROCESSING
CENTER, BANGALORU.
Respondent

Assessee by Sh. Kanchan Kaushal, FCA
Sh. Rishab Malhotra, CA
Revenue by Sh. Shiv Swaroop Singh, Sr. DR

Date of hearing: 10/12/2020
Pronouncement on 10/12/2020

ORDER

PER K. NARASIMHA CHARY, JM

Aggrieved by the order dated 21/11/2019 by the learned Commissioner of Income Tax (Appeals), Delhi-42 (“Ld. CIT(A)”) in not granting TDS credit ofRs. 1,14,17,141/- for the assessment year 2017-18, BAE Systems (operations) Ltd (“the assessee”), preferred this appeal.

2. Brief facts of the case are that the assessee is a company incorporated in and is a tax resident of United Kingdom and primarily involved in the production of and providing support in relation to military aircraft. Assesseeclaims to have been following the Mercantile system of accounting and the Revenue from the service contract is accounted for on Mercantile basis as perthe terms of agreement, namely, as and when services are rendered in accordance with the proportionate completion method. The total Revenue received from Hindustan Aeronautics Limited for the assessment years 2017-18 and 2018-19 was Rs. 7,99,32,759/-, a service recipient, as reflected in form 26 AS for assessment year 2018-19. Out of this amount a sum of Rs.4,31,87,175/- was offered to tax in assessment year 2017-18 and the balancewas offered to tax in the assessment year 2018-19. The Hindustan Aeronautics Limited had deducted the tax on the entire amount of Rs. 7, 99, 32, 759/-in the assessment year 2018-19 and the same was reflected in form 26AS of the assessment year 2018-19.

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FAQ :

The main issue was BAE Systems' appeal against the denial of Tax Deducted at Source (TDS) credit amounting to Rs. 1,14,17,141 for the assessment year 2017-18.

This appeal specifically concerns the assessment year 2017-18.

BAE Systems (Operations) Ltd. is a UK-based company involved in the production of and providing support for military aircraft.

The company follows the mercantile system of accounting and accounts for revenue from service contracts on a mercantile basis, using the proportionate completion method.

Hindustan Aeronautics Limited, the service recipient, deducted the tax.

Hindustan Aeronautics Limited deducted tax on the entire amount of Rs. 7,99,32,759 for the assessment years 2017-18 and 2018-19, which was reflected in the Form 26AS for assessment year 2018-19.