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TMI Blog2022 (6) TMI 1384X X X X Extracts X X X X X X X X Extracts X X X X ..... ations and hence the monies are not available to it. Monies in this account are to be paid to the NRRs either directly or through co-brokers not later than 2 weeks from receipt thereof. This account is reflected in the balance sheet of the Assessee with a corresponding liability Reinsurance Premium payable to Reinsurers and hence to assume that said premium is Assessee s income is fallacious. CIT(A) has rightly held that, when assessee is merely a broker and does not have any ownership on the premium amount transferred to NRR, then there was no liability to deduct TDS for remitting the said amount to the co-broker in Singapore. AO s contention that assessee is DAPE of AB Singapore - The assessee has earned brokerage during FY 2015-16 (AY 2016-17) from 275 transactions for doing brokerage business with various NRRs without any involvement of AB Singapore and hence, assessee cannot be recognised as DAPE of AB Singapore. Applicability of para 8 of Article 5 - As here it is not the case where assessee has any authority to conclude contracts on behalf of AB Singapore and conditions with respect to stock of goods are also not applicable. It is also not a case here that assessee secures o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 201(1)/(1A) of the Act." 3. "Whether on the facts and in the circumstances of the case, the Id. CIT(A) was justified in not deciding the issue that the assessee company is a dependent agent of AON Benfield, acting as a Permanent Establishment of AON Benfield in India." 4. "The Appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. 5. "The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 2. The facts in brief are that, the assessee is an Indian resident entity and is licensed as composite broker with Insurance Regulatory and Development Authority (IRDAI) which includes reinsurance broking and consultancy services. The main controversy involves around treating the premium paid by Agriculture Insurance Company of India (AICI), i.e. Indian cedant to various Non-resident reinsurers companies (herein referred to as NRRs) through overseas co-broker, M/s Aon Benfield Asia Pte Ltd, Singapore (herein referred to as AB). As per IRDA guidelines, any Indian license broker to seek support of non-resident reinsurance company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and withholding the tax thereon before making the remittance under consideration and no such certificate has been produced. He further held that activities of the assessee makes it as a Dependent agent PE within the provision of Article 5 of the India Singapore DTAA and consequently the profits of M/s. Aon Bonfield Asia Pte Ltd. Singapore shall be taxable in India as under Article 7 of India Singapore DTAA. He further observed that assessee's business is to provide brokering /consultancy services and remittances have been made to M/s. Aon Bonfield Asia Pte Ltd. Singapore, therefore it was assessee's responsibility to deduct applicable tax before making payments to the non residents. Accordingly, he worked out the total tax as under:- 4. Thus in view of above, M/s. International Reinsurance and Insurance Consultancy & Broking Services Pvt. Ltd. has failed to deduct tax on the income of non-resident entity M/s. Aon Bonfield Asia Pte Ltd which was chargeable to tax as per Section 5 r.w.s 9 of the I.T. Act and is therefore treated as assessee in default as per provisions of Section 201(1) and 201(1A) r.w.s. 195 of the I.T. Act for non-deduction of tax before making payment to M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e insurer arid the role of appellant is mere broker in India. 22. The additional evidence admitted merely supports the finding made independently that the appellant is not the payer. Even without admitting the same, the result would remain same. This is recorded. 23. In view of discussion above, I hold that appellant is not liable for deduction of tax under section 195 on payment since it is not the appellant who made the payment. Ground l (ii) is allowed. Being so I direct Assessing Officer not to raise any liability under section 201 on the same. 7. We have heard both the parties and also perused the relevant findings as well as material placed before us. The fact of the issue is that the assessee company is an Indian broker for placement of reinsurances placed with insurers domicile in India to work in conjunction with overseas brokers. The reinsurance contract is between Indian insurers and the non-resident insurance companies. The details of payment made by the assessee on which non deduction of tax at source is alleged are as under:- Sr. No. NRRs Tax Residence Reinsurance Premium Amount(INR) Claim amount (1NR) Net Amount Paid (INR) 1 Axis Reinsurance Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me, further to NRRs. The said premium are in fact receipts of NRRs which would be subjected to tax in the country of domicile and not in India as admittedly they do not have PE in India. The assessee has already filed copy of TRC, Form 10F of these NRR entities alongwith no PE declaration which fact has not been controverted by the AO. In absence of PE, the premium received by NRRs cannot be held as chargeable to tax in India. As borne from the record, only in the case of one such NRR Swiss Re, AO has treated that it had a service PE and accordingly certificate u/s 197 was obtained which was filed as additional evidence before Ld. CIT (A). 10. From the perusal of the profit and loss account of the assessee, it is seen that it reflects only brokerage as its income. All the monies received by the Assessee from the Indian Insurance companies, i.e., Indian Cedents is held in a bank account which is classified as the "Client Money Account" and this is required to be maintained in accordance with Clause 27 of the Insurance Regulatory and Development Authority (Insurance Brokers) Regulations, 2013 read with Schedule V thereto. The monies lying in this account are not assessee's money and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods or merchandise for the enterprise; (b) he has no such authority, but habitually maintains in the firstmentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise; or (c) he habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise itself or for the enterprise and other enterprises controlling, controlled by, or subject to the same common control, as that enterprise. 9. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise itself or on behalf of that enterprise and other enterprises controlling, controlled by, or subject to the same common control, as that enterprise, he will not be considered an agent of an independent status within the meaning of this paragr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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