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2022 (1) TMI 960 - AT - Income TaxTaxability of income received from re-insurance business in India - PE in India - business connection in India - income taxable in India - Indo-Swiss Tax Treaty - HELD THAT - This issue has already been decided in favour of the assessee that assessee has neither a business connection in India nor it has a PE in India in view of the provisions contained in Explanation 2 to section 9(1) of the Act as well as under the provisions of Indo Swiss Tax Treaty, the operative part of the order passed by the Coordinate Bench of Tribunal in assessee s own case for AY 2014-15 2021 (7) TMI 1018 - ITAT MUMBAI We are of the considered view that assessee has neither a business connection in India in the light of the Explanation 2 of section 9(1) of the Act nor it have PE in India under the provision of Indo-Swiss Tax Treaty, hence business income of the assessee computed by AO under rule 10 of the I.T. Act to the tune of ₹ 89,94,57,360/- is not sustainable, hence, order to be deleted - Decided in favour of assessee.
Issues Involved:
1. Assessment of total income. 2. Business connection and Permanent Establishment (PE) in India. 3. Adherence to previous Tribunal decisions. 4. Incorrect computation of reported loss. 5. Short granting of interest under section 244A. Issue-wise Detailed Analysis: 1. Assessment of Total Income: The primary issue revolves around the Assistant Commissioner of Income Tax (Intl. Taxation), Circle-4(2)(2), Mumbai's proposal to assess the total income of the appellant at ?899,470,800 against a reported loss of ?79,280,349. The Tribunal found this ground to be general in nature and did not require specific findings. 2. Business Connection and Permanent Establishment (PE) in India: The appellant contested that it neither has a business connection in India nor a PE under the Indo-Swiss Tax Treaty. The Tribunal noted that this issue had been consistently decided in favor of the appellant in previous years (AY 2010-11 to AY 2015-16). The Tribunal reiterated that the appellant does not have a business connection in India as per section 9(1)(i) of the Act or a PE in India under Article 5 of the India-Switzerland Double Taxation Avoidance Agreement (DTAA). The Tribunal emphasized that the services provided by Swiss Re Services India Private Limited (SRSIPL) do not constitute a Service PE or Dependent Agent PE of the appellant in India. Consequently, the reinsurance premium earned by the appellant from Indian insurance companies is not taxable in India. 3. Adherence to Previous Tribunal Decisions: The Tribunal criticized the Dispute Resolution Panel (DRP) for not following the previous decisions of the Tribunal, which had consistently ruled in favor of the appellant. The DRP had declined to follow the Tribunal's orders on the grounds that the department had appealed to the High Court. The Tribunal found this reasoning unacceptable and reiterated its earlier decisions, holding that SRSIPL is not a PE of the appellant, and thus, the profits from reinsurance business cannot be taxed in India. 4. Incorrect Computation of Reported Loss: The appellant highlighted an error in the computation of reported loss. The AO considered an incorrect amount of ?79,266,903 as the loss instead of ?79,280,349. The Tribunal directed the AO to rectify this mistake within two months, acknowledging it as a mistake apparent on record. 5. Short Granting of Interest under Section 244A: The appellant also raised the issue of short granting of interest under section 244A on the refund determined in the final assessment order. The Tribunal directed the AO to rectify this issue as well, considering it a mistake apparent on record. Conclusion: The Tribunal allowed the appeal filed by the appellant for statistical purposes, directing the AO to rectify the mistakes in computation and interest granting. The Tribunal upheld that the appellant does not have a business connection or PE in India, and thus, its reinsurance premiums are not taxable in India. The decision reinforces the adherence to previous Tribunal rulings and ensures the correct computation of losses and interest.
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