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TMI Blog2022 (8) TMI 1533X X X X Extracts X X X X X X X X Extracts X X X X ..... agency PE for NRRI under DTAA. Therefore, in our considered view, foreign reinsurers do not have PE or business connection in India under relevant DTAA or the I.T. Act, 1961. Therefore, payments are not chargeable to tax in India and are not liable to deduct tax at source u/s. 195 - Consequently, disallowance u/s. 40(a)(i) is wholly unwarranted. IRDAI which is regulatory authority of Insurance companies has also written letter dated 07.05.2008 to CBDT stating that NRR having reinsurance arrangements with Indian insurers do not have PE or branch in India. In respect of reinsurance arrangements with brokers, IRDAI has stated that brokers are not agents of NRR and carry out transaction on principal to principal basis. Therefore, even as per understanding of the regulator, reinsurance arrangements with NRR are not chargeable to tax in India. Since, payments made to NRR are not chargeable to tax in India, question of application u/s. 195(2) of the Income Tax Act, 1961, does not arise and this principle is explained in the case of M/s. G.E. India Technology Centre Pvt. Ltd. [ 2010 (9) TMI 7 - SUPREME COURT] where it was held that application to deduct TDS arises only if income of non-res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, 1961 (herein after referred as the Act ). The assessee is a general insurance company registered with Insurance Regulatory Development Authority of India (IRDA) as per section 3(2a) of Insurance Act, 1938. The assessee being in the business of General Insurance in India as part of its business strategy had entered into reinsurance contract with non-resident insurance companies (NRRI). For the impugned assessment years, the assessee has ceded reinsurance premium to non-resident reinsurance companies situated in United Kingdom, Switzerland, France, Denmark, Germany and Singapore. The assessee has ceded reinsurance premium to NRRIs without deduction of tax at source as required u/s. 195 of the Act. The Assessing Officer has disallowed reinsurance premium paid to non-resident reinsurance companies u/s. 40(a)(i) of the Act on the ground that income of NRRIs is liable to tax in India in terms of section 5 r.w.s. 9 of the Act. The Assessing Officer had also discussed the issue in the light of DTAA between India and other contracting states where the non-resident reinsurance companies are tax residents and observed that NRRIs is having PE in India because in some cases, the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent Insurers cannot be disallowed as per the provisions of section 40(a)(i) of the income tax act. In response to which, the assessee has replied as under, Section 195 is invoked only if the amount payable is subject to tax under the Indian Income Tax Act 1961. Reinsurance payment made to foreign reinsurers is not subject to tax in India due to the following: No Permanent Establishment Status: As per the Double Taxation Treaty agreement entered into with foreign countries, the profits of an enterprise of a Contracting state shall be taxable only in that state unless the enterprise carries on business in the other contracting state through a permanent establishment situated therein. For eg. The OTTA with Germany consist of the following: ARTICLE 7 - Business Profits -1 The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment. As per section 90 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the non-resident Reinsurer (NR) is governed by a contract, usually called a 'Cover Note'. As per the terms of the contract, the NR becomes entitled to receive a part of the original insurance premium due to the Insurer, the 'cedant' by way of reinsurance premium. The contract provides that the liability to pay the reinsurance premium by the II to the NR arises as and when the II sells an insurance policy to the person insured in India. Thus, the reinsurance income accrues to the NR as and when the insurance premium income from insurance policies in India accrues to the Insurer. Place of Accrual: The event of selling the insurance policy by the Insurer takes place in India. This event causes the Reinsurance income to accrue or arise in India. In many cases, even the Reinsurance payments are made in Indian Rupees only. The Broker who receives them, in turn remits the money to the concerned reinsurers. Any liability/loss claim on those Reinsurance transactions also arise in India such claims are made on the reinsurers through the Brokers arranging the transaction. In fact, in most of the Treaty type transactions, what is remitted abroad periodically is the net amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, tax shall be deducted under sub-section (1) only on that proportion of the sum which is so chargeable. (c) Sub-section (3) provides that any person entitled to receive any interest or other sum on which income tax is to be deducted under subsection (1) may make an application in the prescribed form to the Assessing Officer for the grant of a certificate authorizing him to receive such interest or other sum without deduction of tax under the subsection. (d) Further, sec. 197 provides that the recipient can file an application to the Assessing Officer for a certificate that the total income of the recipient justifies the deduction of income-tax at any lower rates or no deduction of income-tax and the Assessing Officer is satisfied, can grant such certificate as may be appropriate. In the scheme sub-section (1), (2) (3) of Sec. 195 and Sec. 197, the expression any other sum chargeable under the provisions of this Act would mean sum on which income-tax is leviable. In other words, the said sum of chargeable to tax and could be assessed to tax under the Act. That sum may be income or income hidden or otherwise embedded therein. The scheme of tax deduction at source applies not only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volume of remittances out of India increased, issuing NOC for every payment became cumbersome. Hence, an alternative solution to this requirement was provided. The Central Board of Direct Taxes issued Circular No. 759 dated 18 November 1997, to dispense with the requirement of a no objection certificate from Income-tax Authorities provided the person making the remittance furnished an undertaking in duplicate accompanied by a certificate from a Chartered Accountant. The proforma of the undertaking to be given by the remitter and the certificate to be issued by a Chartered Accountant were reconsidered and new formats were prescribed by the Circular No. 10/2002 dated 9 October 2002. The persons making the remittances shall have to submit the undertaking and certificates prescribed to the Reserve Bank of India/authorized dealer banks, who shall in turn forward the same to the Assessing Officer mentioned in the undertaking. In the present case, the insurance company did not approach the Income tax Department u/s. 195 (2) before remitting the payments to non-residents. Nor they filed the prescribed undertaking along with the certificate from an accountant while making the remittances. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax or a smaller amount is chargeable to tax. If no such application has been filed, then tax has to be withheld on the whole of such sum. This is a statutory obligation of the remitter. d. Further the following decisions of the Honorable ITAT Chennai are in favour of the department:- (a) Frontier Offshore Exploration India Limited Vs DCIT (ITA No. 2037/Mds/06) for A.Y. 2003-04, ITAT Chennai. (b) Poompuhar Shipping Corporation Limited Vs. ITO (109 ITD 226). (c) West Asia Maritime Limited vs ITO Hon ble ITAT-Chennai. e. Further, it is essential to note that, the Hon'ble Authority for Advance Ruling in the case of Raj iv Malhotra (in Re) reported in 284 ITR 564, has held that even though the services are rendered outside India the remittances shall be taxable based on the facts and circumstances of the case. Hence, it is clear that, if there is no specific circular has been issued by the department to exclude certain specific payments from the purview of the section 195 of the act, it is mandatory on the part of the assessee to deduct tax at source as per section 195(1) of the Act, otherwise, it should seek permission of the department as per the provisions of Section 195(2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act shall continue to determine the question of assumption of risk by an insurer. (2) In the case of reinsurance contracts, it may be agreed between the parties specifically or as part of international market practices that the licensed reinsurance broker or composite broker can collect the premium and remit to the reinsurer and/or collect the claims due from the reinsurer to be passed on to the insured. In these circumstances the money collected by the licensed insurance broker shall be dealt with in the following manner: he shall act as the trustee of the insurance money that he is required to handle in order to discharge his function as a reinsurance broker and for the purposes of this regulation it shall be deemed that a payment made to the reinsurance broker shall be considered as payment made to the reinsurer; d) Generally, during the course of making any claim, the insurance broker receive proposal of claims from the Indian insurer and the above claims are being examined by the technical expertise team with the Indian insurance broker and the same will be forwarded to the non resident insurer and based on the above report of the Indian insurance Broker, the non-resident in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aside with the reason that the same is for the purpose of receipt of commission because, the Insurance broker is being mainly involved in collection of the premium from the Indian insurer and also have a major role in the settlement of the claim. Also, it can be considered that the non resident re insurers are being using the Indian insurance brokers as a colourable device to circumvent/avoid their presence in India. iv) It is also essential to note that, the reinsurance brokers (agents) in India have been receiving commission for the above purpose from the Non resident reinsurer, which again proves that there is existence of the Principal agent relationship between the reinsurance agents the Non resident reinsurer. Further, it is essential to note that the assessee has state by its letter dated 11.09.2008 that, it has ceded an amount of Rs. 56,47.745/- to XL Re Ltd, Bermuda during the current year. There is no DTAA exists between India Bermuda. As per the decision of learned CIT (A) LTU, Chennai in the case of M/s. Cholamandalam MS General Insurance Company Limited vide ITA No. 70/2007-08/LTU(A) dtd. 29.8.2008 has held that the reinsurance premium ceded to the NonDTAA countries s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax in India under the provisions of the Act of which tax is deductable at source u/s. 195 of the Act. Since, the assessee has failed to deduct TDS u/s. 195 of the Act on payments made to NRRI towards reinsurance premium ceded to them, the AO has rightly invoked provisions of section 40(a)(i) of the Act and disallowed the same. He further observed that as regards attribution of profits to NRRI, by taking into account operating margin earned by GIC Re for relevant assessment years opined that it is reasonable to estimate the income of the NRRI at 15% of gross receipts and accordingly directed the AO to recompute the income of the appellant by estimating 15% profit on total reinsurance premium ceded to the NRRI, except the NRRIs where the relevant DTAA have specifically excluded the taxation of reinsurance premium in India. Being aggrieved by the CIT(A), the assessee as well as the Revenue are in appeal before us. 6. The Ld. Counsel for the assessee Shri. Sandeep Bagmar, Advocate submitted that similar issue had been heard by the Tribunal in the case of M/s. Cholamandalam MS General Insurance Company Ltd, where Shri. Percy J Pardiwalla, Senior Counsel appeared for the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsurer in the event of the default of the insurer. In fact, most of the time, the insured may not be aware of the existence of reinsurance as the contract of reinsurance is between the insurer and the reinsurer and the insured is not privy to the contract. Reinsurance transactions are done in following 2 ways; (a) Direct Writers - directly with Reinsurance companies situated throughout the world; (b) Through Brokers - brokers act as a conduit pipe in arranging reinsurance between the primary insurers and reinsurers; Reinsurance is done in different methods and ways depending upon the nature of the risk or portfolio of the risk to be reinsured. In India, the IRDA Regulation requires an insurance company to finalize and file with them the reinsurance programme for the next financial year 45 days before the beginning of that FY. In the present case the Assessee has 3 category of ReInsurance premium paid (i) NRR's Where DTAA exist (ii) NRR's where DTAA does not exist (iii) Direct Indian 1. With reference to the Long Term Reinsurance Business, the period of cover of insurance is more than a year. For example, if a client insures his business for five years ie., from 1.4.2005 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to create a charge in respect of non-residents income. Reliance is placed on the decision of Hon'ble MR in the case of Mushtaq Ahmed [176 Taxman 65]. 7. It is also notable that, the above payment of reinsurance premium by the assessee to the non-resident reinsurers without deduction of TDS u/s 195 of the Act shall be taxable in the hands of the Indian insurers based on the decision of Hon'ble Supreme Court in the case of Kanchanganga Sea Foods Limited (325 ITR 540) The facts of the above said case of the Honorable Supreme Court is being compared with the present case as under: Sl No Rule of the Supreme Court in the case of Kanchanganga Sea Food Limited Facts of the assessee's case 1 A plain reading of the provisions of the Indian Income Tax Act makes it clear that for a non-resident income from whatever source derived as taxable in India, if it is received in India. In the instant case, the reinsurance premium has arisen and accrued for the non-resident only in India. The same has been elaborates discussed in the earlier paragraph of this order. 2 The facts of the case is chartered facilities together with the entire catch of the fish were brought to the Indian Port ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly assessed as an assessee in default. Since the transaction was taxable under law, the tax payer was liable to withhold tax as per the provision of Indian Income Tax Law and not having done so, the same has to be disallowed u/ s 40(a)(i) of the Act. Therefore, it is clear that under the provisions of the Income Tax Act, 1961, receipt of income in India attracts tax, irrespective of whether the Income accrued or arose in India or outside India. The present Honorable SC ruling provides guidance on taxability of income received in India by a non-resident. 8. The Honorable SC reiterates that income is received at a place where the recipient first controls it. In the facts of the present case, the nonresident reinsurer was held to have gained control over specific percentage of insurance premium only when it was apportioned by the Indian insurer (Assessee Company) in India port as per the IRDA regulations and based on the agreement entered with the NR reinsurer. Based on the above facts, it is clear that irrespective of whether the income accrued or arose in India or outside India, the receipt of such income is taxable in India as per the provisions of Indian Income Tax Law. 9, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dents. Nor they filed the prescribed undertaking along with the certificate from an accountant while making the remittance. In the above circumstances, the entire payment to Non-resident insurers in the form of reinsurance fee for which the TDS has not been made will be disallowed as per Section 40(a)(i) of Income Tax Act. 8. We have heard both the parties, perused material available on record and gone through orders of the authorities below. The assessee is an insurance company engaged in the business in General insurance in terms of IRDAI regulations and Insurance Act, 1938. The business of the assessee is regulated by IRDAI through various regulations. All the insurance companies which are carrying on insurance business in India have to necessarily comply with provisions of the Insurance Act, 1938 as amended and rules there under. The contract of insurance and contract of reinsurance are two separate and distinct contracts. The reinsurance contract is completely independent of contract of insurance between insured and insurer. The term reinsurance was not defined under the Insurance Act, 1938 until 2015. However, by Insurance Laws (Amendment) Act, 2015, definition of term reinsu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT (A) was justified in restricting claim of the assessee to 15% instead of confirming order passed by the Assessing Officer. The Hon'ble High Court of Madras also observed that the Tribunal shall decide above questions alone and nothing more and decision shall be taken based on the available material and the assessee the Revenue are not entitled to place any fresh materials before the Tribunal so as to enable the Tribunal to take decision. Therefore, from the above, it is very clear that controversy with regard noncompliance with provisions of Insurance Act, 1938 and regulations made there under by the IRDAi is put to rest by the Hon'ble High Court and the Tribunal does not have power to examine legality or otherwise of payment made by the assessee to non-resident reinsurance companies. Therefore, issue on hand should be decided only in the context of payment made by the assessee to NRRI in light of provisions of Income Tax Act, 1961, and relevant DTAA between India and other contracting States. 9. The Assessing Officer has disallowed reinsurance premium ceded to non-residents on the sole premise of non-deduction of tax at source u/s. 195 of the Income Tax Act, 1961. Accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be applicable only in a case where income is actually chargeable to tax in India. In order that there is obligation to deduct TDS, the revenue must establish that income was chargeable to tax in India both in terms of Act as well as in terms of relevant DTAA. If the recipients are non-residents, income was chargeable u/s. 5 r.w.s. 9(1) of the Act, only if income is received or deemed to have been received or income accrues or is deemed to accrue in India. Further, wherever DTAA applies, income chargeable to tax has to be additionally considered under terms of relevant DTAA. In the present case, reinsurance premium ceded to non-resident reinsurers is not chargeable to tax in India under the Income Tax Act, 1961, because income is not received in India, which is evident from fact that except for payment to Indian brokers in few cases, all other payments of reinsurance premium to NRRI have been paid outside India to non-resident brokers or NRRI bank account. Further, payment to brokers in India would not tantamount to receipt in India, having regard to ratio of the judgment of the Hon'ble Supreme Court in the case of Toshoku Ltd. Vs. CIT (1980) 125 ITR 525 (SC), where it was hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income may accrue not at place where asset or property is located or where insurer is resident, but where risk is borne. In the present case, the risk is borne where the non-resident reinsurer resides or where he has funds to make good loss. Therefore, insurance premium cannot be said to accrue in India. 11. We, further, noted that income of NRRI are not deemed to accrue or arise in India, because reinsurance premium ceded to non-resident foreign insurers are raising in India only where the same arises out of business connection in India and even if, exists business connection, the business operations are carried out in India. In the present case, nor do foreign insurers have any fixed place of business in India, neither do they carry on any business operations in India. The term business connection is defined in Explanation 2 below section 9(1)(i) of the Act. None of the conditions that are required to be fulfilled before existence of business connection can be established or complied with. Although, the Assessing Officer has heavily based his finding in light of reinsurance brokers insofar as with NRRI, but fact remains that brokers are merely acting as facilitator or communicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o carry on business in India under the Insurance Act, 1938. Therefore, NRR cannot be said to have any business in India. The reinsurance arrangements between Indian insurer and NRRI are on principal to principal basis and in such scenario; there is no question of any business connection in India. Although, the Assessing Officer observed that place of signing of agreement is material to decide business connection, but it was categorically held by the Hon'ble Supreme Court in the case of Ishikawajima Harima Heavy Industries Ltd. Vs. DIT, 288 ITR 408 (SC) that contract signed in India is of no material consequence. In the present case, signing of reinsurance treaty is either in India or outside India cannot be a ground that income has deemed to accrue or arise in India. 13. Let us now come to chargeability of reinsurance premium ceded to NRRI under DTAA. It is an admitted fact that provisions of Act or provisions of DTAA, whichever is more favorable to the assessee, can be invoked to determine taxability of premium paid to reinsurance companies. It is an undisputed position that reinsurance premium is business profits for reinsurer and therefore, taxability thereof will have to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct assessment years, the assessee has remitted reinsurance premium through non-resident brokers outside India. In order to attract agency PE, the Revenue has to establish that person act on behalf of NRRI in India and such person is economically and legally dependent on the NRRI. In the present case, reinsurance brokers act in their independent capacity and they are not dependent agency of the assessee as well as non-resident insurers. They do not conclude any contract for NRRI and thus, we are of the considered view that there cannot be said to constitute business connection for agency PE for foreign reinsurers in India. The Revenue has also not placed any material on record to demonstrate that reinsurance brokers constitute agency PE for NRRI under DTAA. Therefore, in our considered view, foreign reinsurers do not have PE or business connection in India under relevant DTAA or the I.T. Act, 1961. Therefore, payments are not chargeable to tax in India and are not liable to deduct tax at source u/s. 195 of the Act. Consequently, disallowance u/s. 40(a)(i) of the Act is wholly unwarranted. Further, the IRDAI which is regulatory authority of Insurance companies has also written letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rland DTAA, therefore, there is no PE in India. (d) The services rendered by the subsidiary of NRRI does not constitute a Service PE or Agency PE of the NRRI in India. Thus, the Tribunal held that the reinsurance premium received by the NRRI from Indian reinsurer is not taxable in India both under the Act and the DTAA. (ii) DCIT ICICI Lombard General Insurance Co. Ltd. - ITA No. 2769 Mum, 2011 dt. 30/08/20133 Summary: :In the case of the Indian insurer (ICICI Lombard General Insurance Co. Ltd) the AO disallowed a sum of Rs. 5.84 crores paid to the NRRI in respect of reinsurance premium as no tax was deducted under section 195 and the same could not be considered as business expenditure. The CIT (A) held that the payment made to the NRRI was not taxable in India. On appeal by the Revenue, the Mumbai Tribunal, confirmed the order of the CIT (A) and held that the NRRI did not have any PE in India and, therefore, the reinsurance premium was not taxable in India. (iii) ICICI Lombard General Insurance Co. Ltd. v ACIT- ITA No. 5777/Mum/2011 dt. 14/11/201414 Summary: In the case of Indian insurer (ICICI Lombard General Insurance Co. Ltd) the CIT invoked provisions of section 263 to disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are in nature of preparatory and auxiliary cannot be construed to be the existence of business connection in India within the meaning of section 9(1)(i) or PE under the DTAA. (d) The Tribunal rejected the argument of the AO that there is business connection on account of regular and continuous activity. (e) Activities of subsidiary which are merely in nature of support services do not constitute PE of the NRRI. It also found that the subsidiary had no authority to conclude contract or settle claims on its own or on behalf of the NRRI. (f) The Tribunal also found that in reinsurance arrangements the privity of contract is between the Indian Insurer and the NRRI (g) The Tribunal also held that the manner and mode of carrying on of the transaction is not the proper test to determine whether there exists a fixed place of business or not. (h) The Tribunal concurred with views expressed by coordinate benches in the case of Swiss Reinsurance Co. Ltd., Bajaj Allianz General Insurance Co. Ltd. and Bharati AXA Life Insurance Co. Ltd. Therefore, on all counts the foreign reinsurance company earning reinsurance premium from Indian Insurance companies was not liable for tax in India. (vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or providing reinsurance business, without deduction of tax at source and applicability of provisions of Section 40(a)(i) of the Act. We find that the Tribunal in the aforesaid case placed reliance in assessee s own case for A.Y.2004-05 reported in 152 ITD 855 and also in yet another case rendered in the context of revision proceedings u/s. 263 of the Act in ITA No. 5777/Mum/2011, had quashed the revision proceedings u/s. 263 of the Act by observing as under:- ― 2.3. Thus, the Tribunal by the aforesaid order held that invocation of revisional jurisdiction was not valid. In view of this uncontroverted factual matrix, the appeal of the Revenue is dismissed as infructuous.‖ 3.18. We further find that the Co-ordinate Bench of this Tribunal in the case of General Reinsurance AG, General Reinsurance AG India Branch vs. DCIT in ITA No. 7433/Mum/2018 for A.Y.2015-16 dated 14/06/2019 had an occasion to address the same issue from the perspective of the recipient foreign company. In the said Tribunal order dated 14/06/2019, in para 5, this Tribunal had categorically stated that assessee company in that case had challenged the decision of the income tax authorities in treating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income as it had some taxable income, while in the past years there was no taxable income. In the past, there was no income other than premium on reinsurance business, yet the existence of LO since 2007 is in the knowledge of the assessing authority and no steps have been taken in any of the earlier years to construe the activities of the LO as constituting a 'business connection' or a PE of assessee in India. The learned representative asserted that it is only in this year that the function of the LO (for part of the year) has been understood by the Assessing Officer to be giving rise to a 'business connection' or existence of PE in India so as to hold that the income from the premium on reinsurance earned by the assessee is taxable in India. In our considered opinion, factually as well as on point of law, we do not find any merit in the stand of the Revenue that the activities of the LO of assessee generate any scope for treating it as a PE of assessee in India or a 'business connection' in India. We say so for the reason that the conditions under which the LO has been allowed to operate clearly bring out that the activities were preparatory or auxiliary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered by the Indian subsidiary in the earlier paras 12 and 13 above. In fact, the Assessing Officer is grossly wrong in holding in para 9.7.8 of his order that all the functions with respect to the claim settlement are carried out by the Indian subsidiary itself; rather, it is a case where the Indian subsidiary provides support functions and assists the assessee in such matters. The privity of contract is between the assessee and the Indian insurance companies and, it is abundantly clear from the terms of engagement between the assessee and the Indian subsidiary that the Indian subsidiary is not authorised to execute any contract or settle claims on its own or on behalf of the assessee. In fact, there is no factual support for the stand of the Assessing Officer, as there is nothing either as per the Service agreement or any material to say that the Indian subsidiary has provided actuarial and risk underwriting services, which are core and crucial activities of the reinsurance business. Even the use of 'Electronic Underwriting Software' by the Indian subsidiary is a misnomer. The software is a standard tool which is used by global entities of the group for entering the data ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a), in the present case too, the arguments of the Revenue do not deserve any indulgence. Accordingly, the same are rejected. 20. So far as the case of the Revenue that there is a dependent PE in India is concerned, herein also, the Revenue has merely brushed aside the claim of the assessee that the Indian subsidiary does not have any authority to secure contracts or solicit business on its behalf in India independent of the assessee. According to the Revenue, the Indian subsidiary uses brand name of the assessee while carrying out its activities in India. In our view, the same cannot be a ground to say that there existed a dependent PE in India. In fact, a point which has been emphasised before us is that the assertions of the Revenue that the Indian subsidiary has a decision making authority is a mere bald assertion and is devoid of any factual support. We have perused the order of the Assessing Officer as well as of the DRP and find that the assertions of the assessee in this regard have been completely brushed aside. The income- tax authorities have not referred to any particular arrangement or agreement or any other piece of evidence to show that the Indian subsidiary could ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Sec. 9(1)(i) of the Act as well as treating the Indian subsidiary as a PE in India. In nutshell, the facts as well as the dispute before our co-ordinate Bench in the case of Swiss reInsurance Co. Ltd. (supra) stood on a similar footing as is the case before us. Our co- ordinate Bench considered the provisions of Explanation-2 to Sec. 9(1) of the Act as well as the provisions of IndiaSwitzerland DTAA, which was the subject matter before it, and concluded that the foreign company therein did not have any 'business connection' in India or a PE in India. The aforesaid precedent fully supports the inference which has been drawn by us in the earlier paras. Similarly, in the context of Sections 201/201(1A) of the Act proceedings in the ITA Nos. 4805 to 4808/Mum/2015 dated 05.07.2017 in the case of M/s. Bharti-AXA Life Insurance Co. Ltd., the foreign company in India was held not to be liable for tax in India on its reinsurance premium earned from the Indian insurance companies. In fact, our co-ordinate Bench in the case of M/s. BhartiAXA Life Insurance Co. Ltd. (supra) followed the earlier decision in the case of Swiss re-Insurance Co. Ltd. (supra). Similar was the situation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther find that the Co-ordinate Bench decision of this Tribunal in Swiss Reinsurance Co. Ltd., vs. DDIT International Taxation, Mumbai reported in 55 taxmann.com 520 (Mumbai Trib.) dated 13/02/2015 for A.Y.2010-11 had also addressed the very same issue. The relevant operative portion of the said order is reproduced hereunder:- 5.3 Assuming that conditions of (i) (ii) mentioned herein above are fulfilled, we do not find that the employees of SRSIPL are providing services to the assessee as if they were the employees of the assessee. Therefore, condition laid down under Article-5 of the Treaty are also not fulfilled to treat SRSIPL as PE of the assessee. Article 5(4) of the Treaty reads as under:- Notwithstanding the preceding provisions of this Article, an insurance enterprise of Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 6 applies. 3.22. From the perusal of the relevant clause of Article 5(4) of the treaty reproduced supra, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 2007-08 did not follow order of his predecessor for the assessment year 2005-06 on the ground that judgment of the Hon ble Bombay High Court in Vodafone International Holdings (supra) and of the Hon'ble Supreme Court in the case of Kanchanganga were not considered. We find that the Hon'ble Supreme Court has reversed decision of the Hon ble Bombay High Court in the case of Vodafone International Holdings and thus, basis of the CIT (A) to rest his decision on basis of said judgment is no longer justifiable. As regards decision of the Hon'ble Supreme Court in the case of Kanjanganga, we find that facts of the said case is completely distinguishable and only issue which was decided therein was whether there was receipt of income in India which gave rise to a charge. In this case, it was clearly held that sum paid by the assessee to NRR is not taxable in India under the Act as well as DTAA between India and respective countries and thus, case laws relied upon by the Assessing Officer on the issue is incorrect. 17. In this view of the matter and considering facts and circumstances of the case and also by following various case laws discussed hereinabove, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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