TaxTMI 
TaxTMI 
2022 (8) TMI 1533
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....s made by the Assessing Officer towards 40(a)(i) disallowance. The assessee had also raised common grounds for all assessment years and challenged deletion of certain additions made by the Assessing Officer. Since, multiple issues need to be decided, we deem it appropriate not to reproduce grounds of appeal filed by the assessee as well as Revenue. 3. The brief facts of the case are that the appellate is a domestic company engaged in the business of general insurance filed its return of income for relevant assessment years u/s. 139(1) of the Income 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 N....
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....hey are ✓ from any business connection in India or ✓ Through or from any assets or source of income in India or ✓ through the transfer of a capital asset situate in India Thus, the income of a non-resident is taxable in India if the income accrues, arises or received in India or if it is deemed to accrue, arise or received in India. In case of deemed accrual or arisen of business income, such part of the income that is attributable to the operations carried out in India would be taxable. Hence, the assessee has been show caused why the reinsurance ceded to the Nonresident 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 en....
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....gainst the reinsurance company. Thus it must be emphasized before the authorities that these are not back to back arrangements and reinsurance is at the discretion of the insurance company. Hence, the question of the insurance company being treated as an agent of the reinsurer cannot arise". The above reply furnished by the assessee has been carefully considered. In the case of the Reinsurance income of the Non Resident, in the light of the legal position as per the income tax act, the issue of when and where the income accrues or arises is discussed as under: Time of accrual: The reinsurance transaction between the Indian Insurer (II) 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 ....
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.... deduction of tax in cases where payment is to be made to a non-resident which, inter alia, provides that: (a) Any person responsible for paying to a non-resident, any interest, or any sum chargeable under the provisions of this Act (other than interest on securities and salary) shall at the time of payment, deduct income-tax thereon at the rate in time. (b) Where the person responsible for paying any sum chargeable under the Act to a nonresident considers that the whole of such sum would not be chargeable in the case of the recipients, he may make an application to the Assessing Officer to determine 'the appropriate proportion of such sums so chargeable' upon such determination, 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 tha....
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....or for grant of certificate authorizing the recipient to receive the amount without deduction of tax, or deduction of income tax at any lower rates or no deduction. On such determination, tax at the appropriate rate could be deducted at the source. If so such application is filed, income-tax on such sum is to be deducted and it is the statutory obligation of the person responsible for paying such 'sum' to deduct tax thereon before making payment. He has to discharge the obligation of tax deducted at source'. Following the provisions of sec. 195, production of a no objection certificate from Income tax Authorities was required by the Reserve Bank of India for making remittance to a nonresident. As the 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 Accounta....
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....ose of determining the chargeability on the non-resident payments. Hence, it is the obligation on the part of the assessee to deduct the tax at source as per the section 195 of the act & above cited decision of the Hon'ble Delhi Tribunal is squarely applicable in the instant case. c. It has been established in the earlier paragraphs discussed that the reinsurance premium ceded outside India to NRs by the assessee are chargeable to tax under sec. 195 of the act. The Apex Court of the country, in the case of Transmission Corporation of Andhra Pradesh Vs CIT (239 ITR 587) has held that a person making a payment to a nonresident is duty bound under section 195(2) to file an application to the Income-tax Authority, if the payment is not chargeable to 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 Corp....
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....ess which benefits the non-resident insurer. b) Since, the non-resident insurers do not having the technical knowledge in the local business (Indian business), the Indian Broker is being acting as an informal agent to help the nonresident to understand the business in India and to get confidence while underwriting. c) Normally, the Indian Insurer remits the entire reinsurance premium to the Indian Insurance Broker who in turn distributes to various nonresident re insurers. Further, as per the IRDA Regulations once the insurance premium is remitted to the Indian Broker, the liability of the Indian Insurer is considered to be discharged. The corresponding IRDA Notification dated 16.10.2002 is reproduced as under, "23. Segregation of insurance money- (1) The provisions of section 64VB of the 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 pas....
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....trade. Further, once the reinsurance premium is paid to the Indian insurance Broker, the liability of the Indian Insurer is discharged and during the course of claim, the proposal submitted by the Indian Broker 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 nonresident insurer will settle the claim to the Indian Insurer. Which means that the Indian insurance broker is being acting as an agent of the Non resident insurer. Hence, from the above facts, it is clear that the circular No: 23 of 1969 is squarely applicable in the instant case. iii) Further, the reinsurance broker is the person who has signed the cover note of the insurance business can not be simply brush 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 ....
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....ld that non-resident reinsurer is having PE in India and consequently income of nonresident reinsurer is liable to tax in India. Since, income of NRRI is not liable to tax in India either under the Indian Income Tax Act, 1961 or under DTAA between India and respective contracting states, the question of withholding TDS on said payments u/s. 195 of the Act does not arise and consequently payments made to nonresident insurer towards reinsurance premium cannot be disallowed u/s. 40(a)(i) of the Act. 5. The CIT (A) after considering submissions of the assessee and also taken note of various facts held that profit from the reinsurance business of NRRI is nothing but its share of profit or loss of the insurance business entered into in India and therefore, should be considered as accruing in India. He further observed that payments received by the NRRI are chargeable 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 th....
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....the event of a loss or damage to the risk. Reinsurer has the same economic objective as insurance generally, i.e. the transfer and consequent elimination or reduction of risk by creation of a wider spread of exposure. Insurance of insured risk is called Reinsurance. The Insurer issues policies covering the risks of its clients (insured) in their own name and not in the name of the re-insurance companies. Re-insurance does not affect the relationship between the insured and the direct insurer, in particular the liability of the insurer (United India Insurance Company Limited) to indemnify the insured (Client of United India Insurance Company Limited). In the event of any insurer failing to honour the reinsurance contract, the insurer cannot escape from his liability to the direct insured. Conversely, the insured (Client of insurer) normally has no recourse against any reinsurer 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 wa....
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....vity in the taxable territories can be considered as a business connection which is otherwise the permanent establishment in India. In the instant case, the re-insurance transactions are regular and recurring. Hence it is clear that there is business connection between the Non-resident reinsurer and the assessee company. 5. It is essential to note that, the CBDT Circular No. 7 dated October 22, 2009 has withdrawn the earlier circulars issued with regard to the Nonresident taxation, viz. Circular No.23 dated July 23, 1969, Circular No. 163 dated May 29, 1975 & Circular No. 786 dated February 7, 2000. 6. Further, section 9 of the Income Tax Act, applies to all assessee irrespective of their residential status and place of business. However, where income is actually received or accrued in India resort to the deeming provisions u/s 9 is not warranted, in such case, the provisions contained in Section 5(2) is sufficient 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 n....
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....ived the charter fee in the form of 85% of the catch m India, its subsequent sale and realization outside India does not change the conclusion of its first receipt being in India. The non-resident reinsurer having received the reinsurance premium on a specific percentage as per the terms of the agreement made m India, its subsequent accounting does not change the conclusion of its first receipt being in India. 5 In the facts of the present case, the NR received the charter fee m India m the form of 85% of the catch after its valuation, over which it alone had control and, therefore was taxable in India. The non-resident received reinsurance premium in India at specific percentage as per the terms and conditions of the agreement over which it alone had control and therefore was taxable in India. 6 Since the transaction was taxable and the Tax payer was liable to withhold taxes under the provisions of the Indian Tax Law, and not having done so, it was 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....
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.... simply brush 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 reinsurers are using the Indian Insurance brokers as a colorable device to circumvent / avoid their presence in India. 12. It is also essential to note that the reinsurance brokers (agents) in India have been receiving commission for the above purpose from the Nonresident re-insurer, which again proves that there is existence of the Principal & Agent relationship between the reinsurance agents & the Nonresident re-insurer. Based on the above facts, it is clear that, the assessee has failed to deduct TDS on the above payments as per the Section 195 of Income Tax Act. Also, it 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 remittance. In the above circumstances, the entire payment to Non-resident insurers in the f....
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....ith reinsurance regulations by taking required percentage of reinsurance contract with General Insurance Corporation of India. But disputed reinsurance premium ceded to non-resident reinsurer companies. In the earlier round of litigation, the Tribunal had discussed the issue of payments made to nonresident reinsurer, in light of provisions of section Insurance Act, 1938 and IRDAI Regulations on reinsurance and concluded that the assessee has violated provisions of Insurance Act, 1938 and consequently, reinsurance premium ceded to NRRI is not deductible u/s. 37 (1) Of the Income Tax Act, 1961. The matter travelled to the Hon'ble High Court of Madras and the Hon'ble High Court has remanded the issue back to the Tribunal and directed the Tribunal to decide the issue on three points:- i) Whether the Assessing Officer was right in disallowing reinsurance premium u/s. 40(a)(i) of the Act; ii) Whether the CIT (A) was right in rejecting partially the appeal filed by the assessee; & iii) Whether the CIT (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 ....
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....is duty bound under section 195(2) of the Income Tax Act, 1961 to file an application to the income-tax authority, if payment is not chargeable to tax or smaller amount is chargeable to tax. If no such application is filed, then tax has to be withheld on whole of such sum. The sum and substance of observations of the Assessing Officer is that income of NRRI is taxable in India and thus, the assessee is liable to deduct tax at source u/s. 195 of the Act. Since, the assessee has failed to deduct TDS u/s. 195 of the Income Tax Act, 1961, the Assessing Officer has disallowed reinsurance premium ceded to NRRI u/s. 40(a)(i) of the Income Tax Act, 1961. 10. We have given our thoughtful consideration to the reasons given by the Assessing Officer in light of arguments advanced by the learned counsel for the assessee as well as ld. Sr. standing counsel for the department and we ourselves do not subscribe to the reasons given by the Assessing Officer for simple reason that provisions of section 195 of the Act will 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 charge....
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....f NRRI is also outside India. Therefore, in our considered view observations of the Assessing Officer regarding taxability of reinsurance premium ceded to NRRI in India is absolutely contrary to facts and also well settled law. Further, only activity in reinsurance contract is bearing of risk and activity of indemnifying an Indian insurance company by foreign reinsurer takes place overseas and hence, foreign reinsurers bears risk abroad. Therefore, reinsurance premium paid to NRRI cannot be said to accrue or arise in India. Insofar as observations of the Assessing Officer with regard to reinsurance contracts were signed in India is not relevant as held by the Hon'ble Supreme Court in the case of Ishikawajima Harima Heavy Industries Ltd. Vs. DIT (2007) 288 ITR 408 (SC), where it was observed that contract signed in India is of no material consequence, since all activities in connection with off shore supply were outside India and therefore, cannot be deemed to have accrued or arose in India. Further, 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-residen....
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....me Tax Act, 1961. 12. At this point, we would like to take support from decision of the co-ordinate Bench of Mumbai Tribunal in the case of ADIT Vs. AON Global Insurance Service Ltd. in ITA Nos. 5184 to 5186/Mum/2009 dated 30.11.2015, where it has been held that insurance broker is an independent broker and not an agent. Therefore, in our considered view reinsurance premium paid to NRRI, where India is having DTAA with other countries without specific exclusion and reinsurance premium paid to NRRI where there is no DTAA with other countries through resident brokers, no income is chargeable to tax in India in the hands of nonresident reinsurers and consequently, no disallowance can be made u/s. 40 (a)(i) of the Income Tax Act, 1961. Further, the NRR do not have any business connection in India in any form whatsoever, irrespective of fact whether reinsurance payments are made directly or through resident brokers or non-resident brokers. The NRR being non-resident reinsurance company is expressly prohibited to 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 ....
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....e premium, said amount can be taxed in India only if foreign reinsurance companies have PE in India. It is the allegation of the Assessing Officer that reinsurer had fixed place of PE or an agency PE or service PE in India. Most of the DTAAs define PE to mean fixed place of business, through which business of the enterprises is wholly and partly carried on and includes branch, office, factory, workshop etc. In the case of foreign reinsurers to whom the assessee has remitted reinsurance premium during the subject assessment years do not have any fixed place of PE in India and thus, question of fixed place of PE in India within the meaning of Article 5 of the DTAA does not arise. In fact, the assessee has obtained declaration from foreign reinsurers which are part of paper book filed by the assessee. Thus, in our considered view there is not fixed place of PE of NRRs. 14. The Assessing Officer alleged that there is agency PE of NRRI in India on the basis of availing services of reinsurance brokers. During the subject 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 ....
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....5. Coming back to various case laws relied upon by the assessee. The assessee has relied upon various decisions of co-ordinate Bench of the Tribunal in the case of Insurance companies in support of their arguments. The relevant cases laws relied upon by the assessee are reproduced as under:- Swiss Re-Insurance Company Ltd vs DDIT - ITA No. 1667/Mum/2014 dt .13.02.2015. Summary: In the case of NRRI (Swiss Reinsurance Co. Ltd., Switzerland) the AO sought to tax the NRRI on the ground that it had business connection in India as it received income from providing reinsurance to various insurers in India. The Mumbai Bench of the Tribunal reversing the decision of the AO held as follows: (a) The subsidiary of the NRRI in India does not constitute PE of its holding company (b) Conditions specified in cl (a) to (c) of Explanation 2 to section DLIT 9(1)(i) of the Act are not satisfied, therefore, the NRRI does not have any business connection in India. (c) Reinsurance is specifically excluded from the ambit of PE in India-Switzerland 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 ....
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.... that insurance broker is an independent broker and not an agent. It also held that insurance broker does not carry out any activity on behalf of anyone in India and has no authority to enter into any contract in India . The Tribunal examined the scope of section 9(l)(i) and the DTAA and held that the insurance agent has no business activity on behalf of the NRRI. (vi) General Reinsurance AG v DCIT - ITA No. 7433/Mum/2018 Summary: In the case of NRRI (General Reinsurance AG, Germany) the AO sought to tax the NRRI on the ground that it had a business connection and PE in India. The AO in this case held that the reinsurance proposals are procured from the insurance companies or brokers in India, which is a regular and continuous activity, therefore there is business connection. The Mumbai Bench of the Tribunal reversing the decision of the AO held as follows: (a) The onus is on the AO to establish that the foreign company has a business connection or PE in India. (b) Subsidiary of a foreign company would not be conclusive to say that there exists a PE in India. (c) Activities of Liaison Office which are in nature of preparatory and auxiliary cannot be construed to be t....
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....nal in the case of Cholamandalam MS General Insurance Co. Ltd to drive home the point that the said payment shall be liable for deduction of tax at source in terms of Section 40(a)(i) of the Act. We find that though the Hon'ble Madras High Court in para 26 had held that Chennai Tribunal decision in confirming the action of the ld. AO in invoking provisions of Section 40(a)(i) of the Income Tax Act was not supported with any reasons, finally in para 28, the Hon'ble Madras High Court had remanded this question to the Tribunal to decide whether the ld. AO was right in disallowing the reinsurance premium u/s. 40(a)(i) of the Act. Hence, that question needs to be decided by the Tribunal. Accordingly, the issue of applicability of provisions of section 40(a)(i) of the Act is adjudicated by us independently. We find that the Co-ordinate Bench of this Mumbai Tribunal in the case of DCIT vs. ICICI Lombard General Insurance Co. Pvt. Ltd., in ITA Nos. 6837 & 6832/Mum/2014 for A.Y. 2005-06 and 2009-10 vide order dated 04/10/2016 had adjudicated the very same issue in respect of payments made to M/s. Odyssey America Reinsurance Corporation, Singapore for providing reinsurance business, wit....
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....rance premiums, which is the subject-matter of dispute before us. So far as the nature of receipts in question is concerned, there is a convergence between the assessee and the Revenue that the same are in the nature of business receipts. It is quite well understood that in such like cases where the foreign company earns business income, the same can be taxed in India only if it has a PE in India or 'business connection' so as to fall within the scope of Indian tax laws. At the outset, it has been asserted by the appellant before us that in such situations, the onus is on the Revenue to establish that the foreign company has a 'business connection' or a PE in India so as to invite any tax liability under the Indian tax laws. Ostensibly, the aforesaid is supported by the judgment of the Hon'ble Supreme Court in the case of E funds IT Solution Inc vs ADIT, (2017) 86 taxmann.com 240. Therefore, in this background, we may now examine the facts of the instant case as to whether such an onus has been discharged by the Revenue or not." 17. It has been asserted before us that the instant year is the first year when the assessee has filed a return of income as it had s....
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.... Act or whether the Indian subsidiary constitutes a PE of assessee in India. Article 5(1) of the India- Germany Tax Treaty provides that PE means a fixed place of business through which the business or enterprise is wholly or partially carried on. On this aspect, the case set-up by the Revenue is that the key functions of reinsurance business, namely, actuarial services and underwriting services are provided by the Indian subsidiary. Such discussion is contained in paras 9.7.2 to 9.8 of the final order of the Assessing Officer. On this aspect, we have carefully examined the contentions put forth by the Revenue as well as the material on record, namely, the Master Service Agreement and the Addendum to the Master Service agreement between assessee and the Indian subsidiary and find that the approach of the Assessing Officer is quite misdirected. In fact, the services that have been provided by the Indian subsidiary are support services in the field of actuarial and underwriting functions undertaken by the assessee and not services of actuarial or underwriting of insurance risks per se. We have already quite succinctly noted the nature and scope of the services rendered by the Indian ....
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....se of E funds IT Solution Inc (supra) are very apt. In para 12 of its order, the Hon'ble Supreme Court has dealt with in detail, by making reference to the findings of the Hon'ble High Court, and concluded that there was no fixed place PE of the assessee before it on the facts of the case before it. One of the points noted by the Hon'ble High Court was that the foreign company was dependent on the Indian subsidiary for earning its income. This aspect was specifically negated and held not to be a relevant criteria to determine whether there existed a fixed place PE or not. Similarly, the manner and mode of carrying on of transaction was also not found to be a proper test to determine as to whether there existed a fixed place of business or not. Taking a cue from the reasoning approved by the Hon'ble Supreme Court, in the present case too, the mere rendering of support services in connection with actuarial or underwriting services cannot be a ground to say that there exists a fixed place or a PE of the assessee in India. Therefore, on parity of reasoning which prevailed with the Hon'ble Supreme Court in the case of E funds IT Solution Inc (supra), in the present c....
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....l in the case of Swiss reInsurance Co. Ltd. vs DDIT(IT), [2015] 55 taxmann.com 520 (Mumbai - Trib.), which according to the learned representative, is directly on the point. We have perused the said decision and find that the factual matrix which prevails in the instant case before us is similar to what has been considered in the case of Swiss re-Insurance Co. Ltd. (supra). In para 2.1 of the order, the relevant facts have been noted and the discussion reveals that the facts before us are quite similar to the case before our co-ordinate Bench. It was the case of a reinsurance company based in Switzerland which was receiving income for providing reinsurance to various insurance companies in India. Swiss re-Insurance company had a wholly owned subsidiary in India which was rendering administrative, market intelligence and other risk assessment services, which is quite similar to the services being rendered to assessee before us by its Indian subsidiary. Therein also, the appellant was remunerating its Indian subsidiary on the basis of cost plus mark-up. Therein also, the Assessing Officer had sought to tax the income by invoking 'business connection' in terms of Sec. 9(1)(i) ....
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....o. 2560/PN/2012 for A.Y.2008-09 dated 03/02/2016 vide paras 26- 43. For the sake of brevity, the relevant operative portion of that Pune Tribunal order is not reproduced herein. 3.20. It is a fact that in the impugned case of the assessee before us, i.e. Tata AIG Insurance, it is not in dispute that foreign reinsurer does not have any place of business or branch or any business connection or permanent establishment in India. Hence, the payments made by the assessee company to the said foreign insurer is not chargeable to tax in India in the hands of the foreign reinsurer in terms of Section 195(1) of the Income Tax Act. Hence, there is no obligation on the part of the assessee payer to deduct tax at source thereon. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in the case of GE India Technology Centre Pvt. Ltd., vs CIT reported in 327 ITR 456. Accordingly, the provisions of Section 40(a)(i) of the Act would not come into operation at all. Moreover, these decisions were duly quoted by the assessee before the ld. CIT (A) vide its submission dated 25/02/2020 which was completely ignored by the ld. CIT (A) while adjudicating the issue. 3.21. We fur....
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....cost of repetition, we would like to reiterate the fact that there is absolutely no dispute that the foreign reinsurers does not have any place of business in India / permanent establishment in India / branch established in India / Liaison office in India. Hence, any payment made by the assessee company to such foreign insurers would not be chargeable to tax in the hands of the foreign reinsurers in India in terms of Section 195(1) of the Act. Accordingly, as stated earlier, there would be no obligation on the part of the assessee, being a payer, to deduct tax at source and consequently there cannot be any disallowance u/s. 40(a)(i) of the Act. Accordingly, assessee succeeds on this ground also." 16. Insofar as case laws relied upon by the learned CIT(A), of the Hon'ble Bombay High Court in case of Vodafone International Holdings (329 ITR 126), in upholding action of the AO of subjecting reinsurance premium to tax in India, we find that the Hon'ble Supreme Court has subsequently overruled this decision and same has been reported in 341 ITR 1 (SC) and thus, entire basis for the decision of the CIT (A) for the assessment year 2007-08 has no legs to stand. Further, the learned CIT (A....