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2018 (1) TMI 1637 - AT - Income TaxExistence of Permanent Establishment/Business connection in India - Taxability of business Income earned in India, by company incorporated outside India - whether reinsurance business has been specifically excluded from constituting a PE in India under the treaty - DTAA between India and Switzerland - HELD THAT - As decided in own case 2015 (4) TMI 905 - ITAT MUMBAI assessee does not have any business connection in India in the light of Explanation-2 to Section 9(1) of the Act. The assessee does not have PE in India. The facts on record show that there is neither Service PE nor Agency PE in the form of SESIPL. Considering the facts in totality in the light of the relevant provisions of the law and DTAA and the judicial decisions referred to herein above, we have no hesitation in setting aside the assessment order and accordingly we direct the AO not to treat the income of the assessee as taxable under the Act. - Decided against revenue.
Issues involved:
Revenue's appeal against directions given by Dispute Resolution Panel regarding Permanent Establishment (PE) in India, taxation of reinsurance premium income, and applicability of Double Taxation Avoidance Agreement (DTAA). Analysis: Issue 1: Permanent Establishment (PE) in India In the appeals for Assessment Years 2011-12 & 2012-13, the revenue contested the Dispute Resolution Panel's directions regarding the existence of a Permanent Establishment (PE) in India. The revenue argued that the company's activities in India constituted a PE, while the Panel held otherwise. The Tribunal noted that the company, a non-resident entity incorporated in Switzerland, provided re-insurance services in India through its branch in Singapore. The Assessing Officer (AO) considered the subsidiary in India as a Service & Agency PE, leading to taxation of income. However, the Panel, following previous Tribunal orders, ruled in favor of the assessee, stating that the company did not have a business connection in India and that the subsidiary did not constitute a PE. The Tribunal upheld the Panel's decision based on the precedent and dismissed the revenue's appeal. Issue 2: Taxation of Reinsurance Premium Income The revenue contested the taxation of reinsurance premium income earned in India under the deeming provision of section 9(1)(i) of the Income Tax Act, 1961. The revenue argued that the income should be taxed in India despite the absence of a PE. However, the Panel and the Tribunal, following previous decisions, held that the income was not taxable in India as the company did not have a PE in India. The Tribunal dismissed the revenue's appeal based on the established legal principles and precedents. Issue 3: Applicability of Double Taxation Avoidance Agreement (DTAA) The revenue raised concerns regarding the applicability of the DTAA and whether reinsurance business was specifically excluded from constituting a PE in India. The revenue argued that certain clauses of the DTAA should apply to tax the income earned in India. However, the Panel and the Tribunal, in line with previous rulings, held that the company did not have a PE in India and therefore the income was not taxable under the DTAA. The Tribunal dismissed the revenue's appeal based on the consistent interpretation of the DTAA and relevant legal provisions. In conclusion, the Tribunal dismissed both appeals filed by the revenue, upholding the decisions of the Dispute Resolution Panel regarding the absence of a PE in India, non-taxability of reinsurance premium income, and the application of the DTAA. The judgments were based on established legal principles, precedents, and the specific facts of the case.
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