TaxTMI 
TaxTMI 
2026 (5) TMI 941
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....of the Act) is time barred and liable to be quashed. 2. Ground 2 The learned AO has, on the facts and circumstances of the case and in law, and based on the directions of the Hon'ble DRP, erred in assessing the total income of the Appellant at INR 3,630,845,439, as against INR 72,705,000 reported by the Appellant in its return of income. 3. Ground 3 The learned AO has, on the facts and circumstances of the case and in law, erred in holding that in relation to the reinsurance premium amounting to INR 2,656,778,753 earned by the Appellant from its Indian cedents, the Appellant has a business connection in India as per the provisions of section 9(1)(i) of the Act and a Permanent Establishment (PE) in India as per Article 5 of the India-Singapore tax treaty (IS treaty). 4. Ground 4 The learned AO has, on the facts and circumstances of the case and in law, erred in holding that the Appellant has a business connection in India as per the provisions of section 9(1)(i) of the Act and PE in India as per Article 5 of the IS treaty in relation to the retrocession premium amounting to INR 27,736,675,707 earned by the Appellant from Swis....
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.... under-reporting and misreporting of income for the captioned Assessment Year. The Appellant craves leave to add, alter, vary, omit, substitute or amend any or all of the above grounds of appeal, at any time before or at, the time of the appeal, so as to enable the Hon'ble Income-tax Appellate Tribunal to decide this appeal according to law." 2. Ground No. 1 is academic in nature and therefore does not require any adjudication. 3. Ground No. 2 is general in nature and therefore does not require any separate adjudication. 4. Ground Nos. 3 and 4 are interrelated and interconnected therefore are being adjudicated through this present consolidated order. At the very outset we noticed from the records placed before us that these grounds raised by the assessee are squarely covered by the series of decision of Coordinate Bench of ITAT in assessee's own case. for AY 2018-19 (ITA No. 1492/Mum/2022), AY 2019-20 (ITA No. 1995/Mum/2022), AY 2020-21 (ITA No. 31781MUM/2023) and AY 2021-22 (ITA No. 4092/MUM/2023), the same are reproduced herein below: Relevant extract of [TAT order for the AY 2020-21 and AY 2021-22: "21. We have carefully considered the riv....
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....riefly recapitulate the salient features of assessee's business model unexplained why the Revenue's contention cannot be accepted. The assessee's business in relation to India consists of two streams. The first is the run off portfolio which comprises reinsurance treaties originally underwritten by SRCL Singapore branch prior to 1 February 2017 and transferred to the assessee with effect from January 2018. All critical underwriting decisions, risk evaluation and pricing for those contracts were taken by SRCL Singapore branch at the time of original entry into the treaties. The assessee merely stepped into the shoes of SRCL for the remaining tenure of those treaties and continued to bear the risk and maintain requisite capital in Singapore. No fresh reinsurance contracts have been entered into by the assessee directly with Indian cedents after January 2018. 29. The second stream is the retrocession business, where SRIB, which writes new reinsurance business in India in its own name and for its own account, retrocedes a portion Of its assumed risk to the assessee under a retrocession agreement. The contractual relationship in the retrocession arrangement is solel....
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....vices from SRIB and SRGBS. No employees or personnel of the assessee have rendered services in India to any third party. Occasional stewardship visits, if any, by personnel of the assessee or group level officials are only for oversight and protection of investment and do not amount to furnishing of services to a customer in India. The essential condition for existence of a service PE is, therefore, conspicuously absent. 33. The allegation that SRIB and SRGBS constitute a dependent agency permanent establishment of the assessee is equally unsustainable. For a dependent agent PE to arise, the agent in the source country must habitually conclude contracts on behalf of the foreign enterprise or habitually play the principal role leading to the conclusion of contracts which are routinely concluded without material modification by the enterprise. In the present case, the run off portfolio consists of contracts that were concluded in the past by SRCL Singapore branch. Subsequent to their transfer to the assessee there is no evidence that any Indian entity has participated in conclusion or renegotiation of those contracts on behalf of the assessee. For fresh reinsurance business,....
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....Officer and sustained by the Dispute Resolution Panel on this account for both years under appeal cannot, therefore, be sustained and ate liable to be deleted. ..... 52. To recapitulate, we have first taken note of the fact that the issues in these appeals are fully coveted in favour of the assessee by co ordinate bench decisions in the assessee's own case for assessment years 2018-19 and 2019-20 and by the consistent line of authority in the cases of Swiss Reinsurance Company Limited and RGA International Reinsurance Company Designated Activity Company. We have then independently examined the factual matrix and the applicable law and have found that the business model, the nature of activities and the contractual framework remain unchanged in the years under appeal. On both counts, therefore, the revenue's case does not survive. 53. In the result, we hold that the assessee does not have any permanent establishment in India, whether as fixed place PE, service PE or dependent agency PE, in relation to its reinsurance business comprising the run offpodfo/io or its retrocession business with SR/B. The reinsurance premium from Indian cedents and the r....
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.... appeal against the order passed by the DRP as after omission of section 253(2A) by the Finance Act, 2016 with effect from 1-6-2016, no appeal can be filed by the Assessing Officer against the order passed by DRP giving directions under section 144C(5). Since for the Assessment Year 2018-19 Assessing Officer is not permitted to challenge the findings returned by the DRP in appeal before the Tribunal, the revenue cannot be permitted to set up a case against the directions passed by the DRP. Therefore, taking a view consistent with the view taken by the Tribunal in the case of SRCL in order dated 04-07-2017, passed in appeal for the Assessment Year 2013-14 (ITA No. 2759/Mum/2017), the additions made by the Assessing Officer are deleted in view of the finding returned by the DRP that the 'impugned addition already stand adjudicated by the Tribunal in the case of a sister concern in identical facts and circumstances'. Other contentions dealing with the merits, having been rendered academic, are not adjudicated upon and are, therefore, left open. [Para 7.8] ....... In view of the above, additions made by the Assessing Officer are deleted. [Para 9] In r....
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....hrough its Singapore Branch has entered into service agreement since 01/04/2009 with SRS/PL for obtaining risk assessment services, market insurance and administrative support in India and in turn remunerate/compensate SRS/PL on a cost + 12% margin. The AO was of the opinion that since the assessee has remunerated SRS/PL and al/ its employees on a cost + basis, it is clear that the personnel and staff have rendered services to the assessee as de-facto employees. The AO was of the firm belief that the Indian subsidiary SRS/PL provides technical and core reinsurance services, therefore, Dependent Agency Permanent Establishment(DAPE) comes into play. The AO further noted that as per the domestic Income Tax Act, 1961, since the income of the assessee is being earned from India on a regular and continuous basis, the income of the assessee is taxable in India in terms of section 9(1)(i) of the Act The assessee has regular flow of income emanating from India, hence, the assessee has clear cut business connection in India. 2.2 The AO gave the assessee an opportunity to substantiate its claim that the reinsurance premium receipts of the company are not taxable in India. The assesse....
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....1) of the Act. The assessee does not have any PE in India. The facts on record show that there is neither Service PE nor Agency PE in the form of SRSIPL. Considering the facts in totality in the light of the relevant provisions of the law and the DTAA and the judicial decisions referred to herein above, we have no hesitation in setting aside the assessment order and accordingly we direct the AO not to treat the income of the assessee as taxable under the Act. With this Ground No. 1, 2 and all its sub-grounds are allowed. .. 27. Further, the Hon'ble Mumbai I TAT has followed the above mentioned decision of AY 2010-11 for subsequent years as well i.e., from AY 2011-12 to AY 2017-18 6 in case of SRCL. 28. In addition to the judicial precedents relied by the Appellant in the objections filed by it before the DRP, the Appellant also wishes to place reliance on the following judgments for reinsurance and retrocession business: * RGA International Reinsurance Company Designated Activity Company vs. DCIT- ITA Nos. 803 & 2330/MUM/2022 dated 06 September 2023 (Mumbai Tribunal) - A Y 2018-19 and AY 2019-20 * RGA International Reinsurance Company Designa....
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....eld: Relevant extract of ITAT order for the AY 2020-21 and 2021-22: "40. The co-ordinate bench, in the assessee's own case for assessment years 2018-19 and 2019-20, has already applied this principle to the very same agreements and to the very same categories of services rendered by the assessee to SR/B and SRGBS. It has held, after detailed analysis, that while the services may assist SR/B and SRGBS in their operations, they do not equip the Indian entities to perform such functions by themselves without the assessee's ongoing involvement. The Assessing Officer had not identified any specific technology, process or know how that was transferred, nor had he shown that SR/B or SRGBS could dispense with the assessee's services and continue to apply such technology independently. On that basis, the co ordinate bench held that the income in question does not qualify as FTS under ArticIe 12 and deleted the corresponding additions. 41. The reasoning of the co ordinate bench is fully consistent with the decision of the Hon 'ble Bombay High Court in Shell India Markets Private Limited, where the Court dealt with a similar make available provision ....
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.... such income also cannot be taxed as business profits under Article Z The additions made by the Assessing Officer and sustained by the Dispute Resolution Panel on this count for both assessment years under appeal are accordingly deleted. 52. To recapitulate, we have first taken note of the fact that the issues in these appeals are fully covered in favour of the assessee by co ordinate bench decisions in the assessee's own case for assessment years 2018-19 and 2019-20 and by the consistent line of authority in the cases of Swiss Reinsurance Company Limited and RGA International Reinsurance Company Designated Activity Company. We have then independently examined the factual matrix and the applicable law and have found that the business model, the nature of activities and the contractual framework remain unchanged in the years under appeal. On both counts, therefore, the revenue's case does not survive. 53...We further hold that the service income received by the assessee from SRIB and SRGBS does not qualify as Fees for Technical Services under Article 12 of the India Singapore tax treaty and is also not taxable as business income in the absence of any perman....
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....requirement of 'make available' contained therein the recipient of service should be in a position to utilize the knowledge or know how in future on his own. However, on perusal of the Assessment Order, it is found that the Assessing Officer has brought nothing on record to show that the services rendered made available any technical knowledge, know-how, skill, expertise to SRCL-IB/SGB which enables SRCL-IB/SGB to independently perform their function without support of the appellant in the future. The findings returned by the Assessing Officer that the services provided by the appellant enable SRCL-IB/SGB to provide onwards services cannot lead to an automatic conclusion/inference that some technical knowledge, skill or experience was made available by the appellant to SRCL-IB/SGB. In view of the aforesaid, the conclusion drawn by the Assessing Officer that the services under consideration qualify as fee for technical services in terms of article 12 of the DTAA cannot be sustained. [Para 8.1] In view of the above, additions made by the Assessing Officer are deleted. [Para 91 In result, the appeal preferred by the assessee is allowed.[Para 10]" 9. In vie....