2022 (4) TMI 1011

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....section 40(a)(ia) of the Income-tax Act, 1961 (for short 'the Act') for alleged failure of the assessee to deduct tax at source under section 194D of the Act. Learned counsel for the assessee submitted, the assessee is a non-resident company incorporated in France and is engaged in the business of providing reinsurance services. He submitted, assessee has been duly approved by Insurance Regulatory Development Authority of India (IRDAI) to undertake reinsurance business in India. Explaining the modus operandi of assessee's activities, learned counsel for the assessee submitted, the assessee is in the business of reinsurance ceded from insurance company, meaning thereby, the portion of one or more risks that the insurance company undertakes i....

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....owever, they are shared expenses not strictly coming within the nature of commission. Further, he submitted, the Circular makes it clear that it is the reinsurer which provides insurance services to the insurance company. Proceeding further, he drew our attention to the decision of the Tribunal in case of General Insurance Corporation India Vs. ACIT, [2009] 28 SOT 453 (Mum.) to emphasize that since the commission paid by the assessee to the insurance company is in the nature of compensation towards cost of procurement business incurred by the insurance company, it will not come within the purview of section 194D of the Act. He submitted, the aforesaid view expressed by the Tribunal has been approved by the Hon'ble Bombay High Court in case ....