9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (8) TMI 325 - AT - Income TaxTDS u/s 194D - payment of ceding commission - Non deduction of TDS - Addition u/s 40(a)(ia) - assessee is a non-resident corporate entity, incorporated under the laws of France and is engaged in the business of providing insurance and reinsurance - HELD THAT - As identical issued in assessee s own case in assessment year 2018-19 2023 (1) TMI 62 - ITAT DELHI deleted the disallowance made u/s 40(a)(ia) as held that the cedant commission paid by the assessee to the insurance company is actually the share of assessee in the nature of manpower cost, third party administration cost, administration cost, etc. which are actually reimbursement of expenses in relation to the gross premium which the assessee company has received in this regard, so ceading commission cannot be considered to be paid for soliciting or procuring insurance business. Also decided in M/s Royal Sundaram Alliance Insurance Company Limited 2019 (2) TMI 923 - MADRAS HIGH COURT as held as a matter of industrial practice it was termed as commission on reinsurance premium received , however, in substance it is discount on re-insurance premium received by an Insurance Company from another Insurance Company. Thus we delete the disallowance made under section 40(a)(ia) - Decided against revenue.
Issues Involved:
1. Disallowance under section 40(a)(ia) of the Income-tax Act, 1961 due to alleged non-deduction of tax at source under section 194D on payment of ceding commission. Summary: Issue 1: Disallowance under section 40(a)(ia) for non-deduction of tax at source under section 194D on ceding commission Facts: The assessee, a non-resident corporate entity engaged in insurance and reinsurance, paid Rs. 36,81,60,867/- as ceding commission and debited it as expenditure. The Assessing Officer (AO) viewed that the ceding commission paid to insurance companies was liable for deduction of tax under section 194D at 30%. Due to non-deduction, the AO disallowed Rs. 11,04,48,260/- under section 40(a)(ia). The Dispute Resolution Panel (DRP) upheld this disallowance. Tribunal's Decision: The Tribunal noted that the issue was covered by its decision in the assessee's own case for assessment year 2018-19, where it was held that ceding commission is not for soliciting or procuring insurance business but is a reimbursement of expenses. The Tribunal referred to various judgments including those of the Hon'ble Madras High Court and Hon'ble Bombay High Court, which supported the view that no TDS was required on ceding commission. Consequently, the Tribunal deleted the disallowance made under section 40(a)(ia). Conclusion: There being no difference in factual position in the impugned assessment year, the Tribunal, following its earlier decision, deleted the disallowance made under section 40(a)(ia) of the Act. The stay application was dismissed as infructuous, and the appeal was allowed. Order Pronouncement: The order was pronounced in the open court on 17th March, 2023.
|
