Reinsurance brokerage commissions not taxable as fees for technical services under Section 9(1)(vii) and India-UK DTAA

The HC held that reinsurance brokerage commissions paid to the UK-resident assessee were not taxable as fees for technical services under section 9(1)(vii) of the IT Act and Article 13 of the India-UK DTAA. The assessee acted solely as an intermediary without maintaining an office in India, and the services did not satisfy the "make available" clause under Article 13(4)(c). Consequently, the receipts were not assessable as FTS in India, upholding the Tribunal's decision in favor of the assessee.

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Issues: Whether the reinsurance brokerage or commission received by the assessee from Indian insurance companies was taxable as fees for technical services under section 9(1)(vii) of the Income-tax Act, 1961 read with article 13(4)(c) of the India-United Kingdom Double Tax Avoidance Agreement, and whether the make available condition was satisfied.

Analysis: The assessee functioned only as an international reinsurance intermediary or facilitator. The Tribunal found that the services rendered were confined to arranging reinsurance cover and transmitting communications between the parties, and that no technical knowledge, experience, skill, know-how, process, technical plan, or technical design was made available to the Indian insurance companies. The Court held that these findings were factual and that no perversity was shown to justify interference under section 260A of the Income-tax Act, 1961.

Conclusion: The receipts were not fees for technical services, the make available condition was not satisfied, and the appeal failed.

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