MUNCHENER RUCKVERSICHERUNGS- GESELLSCHAFT AKTIENGESELLSCHAFT IN MUNCHEN,MUM vs. DY COMM OF INCOME TAX- INT TAX, CIRCLE-3(2)(2), MUM

PER SMT. BEENA PILLAI, JUDICIAL MEMBER: The above appeals are directed against separate final assessment orders passed by the Ld. Assessing Officer [Ld.AO], tabulated hereinbelow. Since common issues are involved in all these appeals therefore, for the sake of convenience, these appeals are clubbed together for the purpose of hearing and adjudication.

ITA 2302/MUM/2022 Ld. DCIT- INT TAX, CIR-3(2)(2); dated 18-Jul-2022. (AY: 2018-19) ITA 2303/MUM/2022 Ld. DCIT- INT TAX,CIR-3(2)(2) ; dated 15-Jul-2022. (AY: 2019-20)

ITA 2302/MUM/2022 MUNCHENER RUCKVERSICHERUNGS- GESELLSCHAFT AKTIENGESELLSCHAFT IN MUNCHEN The disputes in these appeals concern the disallowance of payments made to the Head Office for IT support and management services, payments made to Munich Management Pte. Ltd., Singapore (MMPL), payments made to Munich Holdings of Australasia Ltd. (MHA), and the adjustment of reserve for unexpired risk while computing book profits u/s. 115JB of the Act. A.Y. 2018-19 also involves a separate addition relating to the provision for reserve for unexpired risk under the normal provisions of the Act. 2.1. The Ld.AR submitted that the substantive issues are covered in favour of the assessee by the consolidated order dated 15/04/2025 passed by the Coordinate Bench in the assessee’s own case in ITA Nos.4832, 4833, 5094 and 5093/Mum/2024 for A.Ys. 2020-21 and 2021-22. Pursuant to the direction of the Bench, the assessee filed written submissions dated 10/08/2026 setting out the ground-wise particulars and the relevant paragraph references. In respect of the adjustment of reserve for unexpired risk u/s.115JB of the Act, reliance was also placed on the order dated 13/05/2022 in ITA No. 397/Mum/2021 for A.Y. 2017-18, which stands reproduced and followed in the order dated 15/04/2025. We have perused the submissions advanced by both sides in light of the record placed before us. 2.2. The issues are taken up hereunder with reference to the ground-wise particulars furnished by the assessee for the respective assessment years. At the time of hearing, the Ld.DR was directed to file a written submission. However as on date, no written submission has been furnished by the Ld.DR. We therefore

ITA 2302/MUM/2022 MUNCHENER RUCKVERSICHERUNGS- GESELLSCHAFT AKTIENGESELLSCHAFT IN MUNCHEN proceed to dispose off the appeals based on the arguments advanced by the Ld.DR at the time of hearing. Admittedly, the issues are common in both the years under consideration arises out of identical facts. Accordingly, the grounds raised by the assessee for the years under consideration are considered together. 2.3. Ground No. 1 in both appeals is general in nature and do not require separate adjudication. 3. Ground No. 2 in both appeals – Payments to the Head Office for IT support and management services 3.1. This ground concerns the disallowance of Rs.4,64,48,619/- for A.Y. 2018-19 and Rs.7,96,14,173/- for A.Y. 2019-20 in respect of payments made to the Head Office for IT support and management services. The Ld.AR relied on paragraphs 4 to 14 of the order dated 15/04/2025 and submitted that the issue is identical to that considered therein. 3.2. We note that the Coordinate Bench examined the allowability of such payments in the context of Article 7 of the India-Germany DTAA and the Protocol thereto. The Bench held that the Indian permanent establishment is to be treated as a distinct enterprise for determining the profits attributable to it and that the payments in question were allowable on the facts considered therein. The relevant findings in paragraphs 11 to 13 are reproduced as under: “11. Article 7(2) of the DTAA between India and Germany creates fiction purpose of determination of the profits or income of the PE where the PE is to be treated as independent or separate entity from its HO. Article 7(3) provides for deduction of expenses which are incurred for the purposes of the business of PE including executive and general administrative expenses subject to the provisions of the Act. With regard to the allowability of the

ITA 2302/MUM/2022 MUNCHENER RUCKVERSICHERUNGS- GESELLSCHAFT AKTIENGESELLSCHAFT IN MUNCHEN executive and general administrative expenses, Paragraph 1(d) and (e) of the Protocol, provides for certain restrictions. Paragraph (d) provides that the Head Office expenses which are in the nature of executive and administrative expenses shall be subject to the restrictions as per section 44C of the Act. It is relevant to mention here that the AO / CIT(A) have held that the expenses claimed by the assessee in this case are not in the nature of expenses to which the provisions of section 44C is applicable. The relevant findings of the AO in this regard is extracted below – 2.10 As per another argument taken by the assessee, the said expenditure shall not be covered u/s 44C as the provisions of section 44C are not applicable to the assessee as the assessee is in re-insurance business is factually incorrect. First of all, the provisions of section 44C are related to expenditures by any branch office to the head office and the same is in the nature of executive and general administration expenditure. However, from the nature of the expenditure claimed by the assessee, they are for specific services and not in the nature of executive and general administration expenditure. Therefore, provisions of section 44C are not invoked in the case of the assessee. 12. Therefore it is not the case of the revenue that the expenses claimed by the assessee are subject to the restrictions of section 44C and therefore, it may not necessary to examine the impugned expenditure in the light of Paragraph (d) of the Protocol. Now coming to Paragraph 1(e) which specifically deals with payments made by PE to HO, we notice that the payments towards Royalties, fees of similar nature, Commission and interest are not to be claimed as a deduction. The exception in this regard is given to the reimbursements and the interest paid by the PE to HO in the case of banking institution. 13. A combined perusal of the Article 7(2) and Paragraph 1(e) of the protocol means that the PE needs to be considered as an independent enterprise for the purpose computing the profit attributable and that there is no restriction to the PE claiming deduction towards payments made to HO unless the expenses fall within clause (i) to (iii) of Paragraph 1(e) of the Protocol. In assessee's case, the nature of expenditure being in the nature of IT support and management services do not fall within clause (i) to (iii) of the Protocol and therefore the restriction provided therein is not applicable. Accordingly in our considered view, the PE being considered as an independent enterprise is to be allowed the deduction towards expenses which are incurred for the purposes of the business of the PE. As regards the restrictions under the domestic law, for the purpose of section 37, the conditions for allowing the deduction are that the expenses should not be capital expenditure or Personal expenses and that the same should be incurred wholly and exclusively for the purpose of business. As already mentioned, the lower authorities have not questioned the genuineness or the business purpose of expenditure. Therefore, there is no reason to deny the assessee's claim towards IT support and management charges paid by Indian Branch to HO as a deduction while computing the profits of the Indian Branch to be taxed in India. We direct the AO to delete the disallowance made in this regard.”

ITA 2302/MUM/2022 MUNCHENER RUCKVERSICHERUNGS- GESELLSCHAFT AKTIENGESELLSCHAFT IN MUNCHEN 3.3. The controversy in the present appeals relates to the same categories of payments to the Head Office. Applying the aforesaid decision to the identical issue before us, we hold that the disallowance of the payments for IT support and management services cannot be sustained. Respectfully following the order of the Coordinate Bench in the assessee’s own case, we direct the Ld. AO to delete the disallowance of Rs. 4,64,48,619/- for A.Y. 2018- 19 and Rs. 7,96,14,173/- for A.Y. 2019-20. Accordingly, Ground No.2 raised by the assessee in both appeals stands allowed.

ITA 2302/MUM/2022 MUNCHENER RUCKVERSICHERUNGS- GESELLSCHAFT AKTIENGESELLSCHAFT IN MUNCHEN are not taxable in India. The assessee also submitted that these entities do not have a PE in India and accordingly the impugned payments cannot be taxed in India. The AO did not accept the submissions and held that the services rendered by both the entities are in the nature of fees for technical services and therefore taxable in India. The AO disallowed the payments made by the assessee under section 40(a)(i) of the Act for the reason that the assessee did not deduct tax at source. On further appeal the CIT(A) deleted the disallowance by placing reliance on the various decisions of the Co-ordinate Bench and by holding that the condition for taxability as FTS is not applicable considering the nature of services rendered by the enterprises. The CIT(A) further held that the receipts are not taxable as business income in the hands of these entities since they do not have any PE in India. 17. We heard the parties and perused the material on record. From the perusal of the nature of services rendered by these enterprises to the assessee, we notice that prima-facie they fall under the ambit of fees for technical services involving rendering of technical and consultancy services under section 9(1)(vii) of the Act. However, in order to tax the said payments in India, it is necessary examine whether it is taxable under the DTAA also. As per Article 12 of the India- Singapore DTAA the payment made to MMPL can be categorised as FTS only if it makes available technical knowledge, skill, experience, know-how etc. Clause 4(b) of Article 12 (Royalties and Fees for Technical Services) of the India - Singapore DTAA defines the term ‘fees for technical services’ to include payments of any kind to any person in consideration for services of a managerial, technical or consultancy nature (including the provision of such services through technical or other personnel) if such services make available technical knowledge, experience, skill, know-how or processes which enables the person acquiring the services to apply the technology contained therein. The technology will be considered "made available" when the person acquiring the service is enabled to apply the technology. The fact that the provision of the service may require technical input by the person providing the service does not per se mean that technical knowledge, skills, etc., are made available to the person purchasing the service, within the meaning of paragraph 4(b). In assessee's case from the perusal of the nature of services rendered by MMPL we notice that MMPL while providing Managerial support services to the assessee does not make available any technical knowledge, experience or skill to the assessee as MMPL is a regional office providing services to various group entities on a year-to-year basis for the efficient operation of its reinsurance business in their respective jurisdictions. It is further noticed that constant support from MMPL to the assessee is required with human intervention and MMPL does not make available any technical knowledge, experience or skill through which the assessee can avail the benefit independently. The ld AR during the course of hearing drew our attention to the decision of the Hon'ble Bombay High Court in Shell India Markets (P.) Ltd v. UOI (2024) 463 ITR 222 (Bom HC) where in the context of the India- UK DTAA it has been held that the consultancy service availed could not be said to be technical services and Article 13 was inapplicable in absence of

ITA 2302/MUM/2022 MUNCHENER RUCKVERSICHERUNGS- GESELLSCHAFT AKTIENGESELLSCHAFT IN MUNCHEN making available technical knowledge etc and Article 13(4)(c) restricts the services which make available technical knowledge or consist of development and transfer of technical plan or technical design. In view of these discussion and considering the various judicial pronouncements we see merit in the contention of the assessee that impugned payments cannot be considered as FTS and not taxable in India. Accordingly we hold that the assessee is not required to deduct tax at source under section 195 of the Act and that no disallowance under section 40(a)(i) is warranted for non deduction of TDS. We therefore see no reason to interfere with the decision of the CIT(A) in this regard.”

4.3. The Coordinate Bench thus held that the services did not make available technical knowledge, experience or skill enabling the assessee to derive the benefit independently. Consequently, the payments were not taxable in India under the applicable DTAA, no tax was deductible u/s. 195 of the Act and no disallowance u/s. 40(a)(i) of the Act was warranted. The issue in the present appeals being identical, respectfully following the aforesaid decision, we direct the Ld. AO to delete the disallowance of Rs. 9,42,18,791/- for A.Y. 2018-19 and Rs. 25,75,36,606/- for A.Y. 2019-20. Accordingly, Ground No. 3 raised by the assessee in both appeals stands allowed.

ITA 2302/MUM/2022 MUNCHENER RUCKVERSICHERUNGS- GESELLSCHAFT AKTIENGESELLSCHAFT IN MUNCHEN “20. We heard the parties and perused the material on record. Considering the nature of services rendered by MHA, the same would fall within the definition of FTS under the Act. While examining the taxability of the said services under the DTAA between India and Australia we notice that the DTAA does not specifically provide for an article on FTS but Article 12 – Royalties inter alia refers to FTS which reads as under:- “3. The term "royalties" in this Article means payments or credits, whether periodical or not, and however described or computed, to the extent to which they are made as consideration for: (g) the rendering of any services (including those of technical or other personnel), which make available technical knowledge, experience, skill, know-how or processes or consist of the development and transfer of a technical plan or design;” 21. From the plain reading of the above it is clear that only if the services make available technical knowledge, experience, skill, know-how or processes, which enables the person acquiring the services to apply the technology contained therein, it would fall under Article 12 of the India- Australia DTAA. In the given case, it is submitted that MHA has been providing IT support services to the assessee and it does not make available any technical knowledge, experience or skill to the assessee. It is further submitted that the assessee has been availing these services since the year 2017 on a recurring basis. Accordingly it is argied that had there been any make available of knowledge, experience, know-how etc., the assessee would not need to depend on MHA for IT support services. From the perusal of the facts and in our considered view the MHA does not make available any technical knowledge, experience or skill through which the assessee can avail the benefit independently. Therefore there is merit in the submission that MHA does not make available any technical knowledge, experience or skill to the assessee and accordingly the amount received by MHA towards rendering of these services are not taxable in India. Therefore we see no infirmity in the order of CIT(A) in deleting the disallowance made by the AO under section 40(a)(i) of the Act.”

5.3. The Coordinate Bench held that MHA did not make available technical knowledge, experience or skill enabling the assessee to avail of the benefit independently and, therefore, the payments were not taxable in India. Following the aforesaid decision on the identical issue, we direct the Ld.AO to delete the disallowance of Rs.1,20,87,821/- for A.Y.2018-19 and Rs.1,37,99,311/- for A.Y.2019-20.

ITA 2302/MUM/2022 MUNCHENER RUCKVERSICHERUNGS- GESELLSCHAFT AKTIENGESELLSCHAFT IN MUNCHEN Accordingly, Ground No.4 raised by the assessee in both appeals stands allowed. 6. Ground No.5 for A.Y.2018-19 – Provision for reserve for unexpired risk under the normal provisions 6.1. This ground concerns addition of Rs.69,19,256/- relating to the provision for reserve for unexpired risk. In the written submissions dated 10/08/2026, the assessee stated that the issue involves a timing difference and expressly did not press this ground. The assessee requested that the Ld.AO be directed to give effect to the consequential impact, if any, in accordance with the provisions of the Act. In view of the express submission of the assessee, Ground No. 5 for A.Y. 2018-19 is dismissed as not pressed. The Ld. AO shall, while giving effect to this order, examine and give effect to the consequential adjustment, if any, arising in accordance with law. No finding on the merits of this ground is being rendered. 7. Ground No. 6 for A.Y. 2018-19 and Ground No. 5 for A.Y. 2019-20 – Reserve for unexpired risk u/s. 115JB 7.1. These grounds concern the addition of reserve for unexpired risk while computing book profits u/s. 115JB of the Act, amounting to Rs.4,02,23,54,000/- for A.Y. 2018-19 and Rs.7,18,01,63,000/- for A.Y.2019-20. The Ld.AR relied on paragraphs 22 to 24 of the order dated 15/04/2025, wherein the Coordinate Bench followed the decision in the assessee’s own case for A.Y. 2017-18.

ITA 2302/MUM/2022 MUNCHENER RUCKVERSICHERUNGS- GESELLSCHAFT AKTIENGESELLSCHAFT IN MUNCHEN 7.2. We note that paragraph 23 of the order dated 15/04/2025 reproduces the findings rendered for A.Y. 2017-18 concerning the nature of the reserve and the permissible adjustments to book profits. The relevant portions of that earlier decision, as reproduced therein, are extracted below: “7. We find that the aforesaid facts and submissions made by the ld. AR remain undisputed and hence the same are not reiterated for the sake of brevity. From the perusal of the above, in our considered opinion, the reserve for unexpired risk does not fall under clause (b) of Explanation 1 to section 115JB(2) of the Act as the premium is recognized as income over the contract period or the period of risk, whichever is appropriate. Premium received in advance which represents premium income not relating to the particular accounting period in which the said premium has been received, is separately disclosed in the financial statements. Hence logically that part of income which is attributable to the succeeding accounting period is reduced from the total premiums received during an accounting period by way of creation of a reserve for unexpired risk which is in accordance with the Insurance Act, 1938. In this regard, the ld. AR also submitted that every year adjustments are made to the existing reserve for unexpired risk by way of crediting or debiting the amount of difference between the reserve created in the immediately preceding year and the reserve required to be credited during the current accounting year. Accordingly, we hold that it cannot be considered as any "amount carried to any reserve" debited to the Profit & Loss Account, but it represents that part of premium income which does not relate to the current accounting period. Hence, in our considered opinion, the creation of a reserve for unexpired risk cannot be considered to be similar to those "reserves" which have been referred to in clause (b) of Explanation (1) to section 115JB(2) of the Act. The amount of provision for unexpired risk has been reduced from the net premium received and there is no debit to the profit and loss account at any point of time. It is elementary that the provisions of section 115JB of the Act require an amount referred to in clause (a) to (k) to be debited to the profit and loss account. Since, there is no debit to the profit and loss account, there is no need to make an addition to the provision for unexpired risk and premium deficiency.” “9. We find that the assessee has prepared the financial statements as per the principles and guidelines prescribed by IRDAI. The expenditure claimed by the reinsurer are calculated and certified by the actuary and the computation of expenditure like reserve for unexpired risk and premium deficiency reserve is certified by the actuary and filed with IRDAI. Further, the statutory auditor in IRDAI-GI-TR has stated that liabilities of the assessee have been determined in the manner prescribed in IRDAI Regulations, 2016 and the amount of liabilities are fair and reasonable. Further, the statutory auditor has also certified that the outstanding claims reserves are estimated using statistical methods determined by the

ITA 2302/MUM/2022 MUNCHENER RUCKVERSICHERUNGS- GESELLSCHAFT AKTIENGESELLSCHAFT IN MUNCHEN actuaries. Based on the above, it is submitted that the regulatory requirement for creation of a reserve for unexpired risk is created using statistical methods under the IRDAI guidelines and certified by the statutory auditor and actuary and, therefore, it is an ascertained liability and it cannot be construed as an adhoc or contingent liability. Hence the same would not fall under clause (c ) of Explanation 1 to section 115JB(2) of the Act also under the category of unascertained liability. We find that the Hon’ble Supreme Court in the case of Bharat Earth Movers reported in 245 ITR 428 (SC) has held that the provision for leave encashment based on actuarial valuation is allowed although the liability may have to be quantified and discharged at a future date. The fact that it is capable of being estimated with reasonable certainty although actual quantification may not be possible and such liability cannot be a contingent one. This decision would be squarely applicable for the reserve for unexpired risk and premium deficiency made by the assessee in the instant case as they are not only estimated but are also derived based on statistical method and the same has been duly certified by the actuary and the auditors of the assessee. Hence we hold that the same should be excluded for the purpose of computing book profit.” “11. Before we conclude the issue, we would also like to address the issue in dispute that Rule 5 of the First Schedule of the Act specifies the computation mechanism of profits/gains arising from general insurance business and specifically allows deduction for reserve for unexpired risk while computing taxable income for the year under consideration. Rule 6E of the Income-tax Rules, 1962 prescribes certain percentage of the net premium for creating reserve for unexpired risks which is allowed as a deduction. Accordingly, in view of the special nature of insurance business, the Act prescribes special procedure for computation of total Income of an Insurance Company. The creation of a reserve for unexpired risk out of the premium received during the year, is a statutory requirement and the same is duly recognised by the provisions of the Act. Accordingly, it can be inferred that the intent of the law has been to allow the said reserve for unexpired risk created by the insurance companies to the extent of specified limits which is derived as a percentage of net premium. Therefore, in our considered opinion, making an addition of reserve for unexpired risk u/s 115JB of the Act would defeat the purpose of the Act which allows deduction of the said reserve to the extent of prescribed limits. Further, the provisions of section 115JB of the Act do not specifically provide for any adjustment in connection with the reserve for unexpired risk and no adjustment is permitted to such profits other than those listed in Explanation 1 to section 115JB of the Act. Reliance in this regard is rightly placed on the decision of Hon’ble Supreme Court in the case of Apollo Tyres Ltd reported in 255 ITR 273 (SC).” “13. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we direct the ld. AO to delete the addition made in respect of reserve for unexpired risk and premium deficiency while computing the book profits u/s 115JB of the Act. Accordingly, the grounds raised by the assessee are allowed.”

ITA 2302/MUM/2022 MUNCHENER RUCKVERSICHERUNGS- GESELLSCHAFT AKTIENGESELLSCHAFT IN MUNCHEN 7.3. After reproducing the aforesaid decision, the Coordinate Bench held in paragraph 24 of its order dated 15/04/2025 as under: “24. Since the facts pertaining to the year under consideration being identical respectfully following the above decision of the Co-ordinate Bench, we are not inclined to interfere with the decision of the CIT(A) in directing the AO to delete the addition made to the Book Profits computed under section 115JB of the Act.” 7.4. The issue relating to the reserve for unexpired risk in the present appeals is identical to that adjudicated in the aforesaid order. Respectfully following the decision of the Coordinate Bench in the assessee’s own case, we direct the Ld.AO to delete the addition of Rs.4,02,23,54,000/- for A.Y.2018-19 and Rs.7,18,01,63,000/- for A.Y. 2019-20 made while computing book profits u/s. 115JB of the Act. Accordingly, Ground No. 6 raised by the assessee for A.Y. 2018- 19 and Ground No. 5 for A.Y. 2019-20 stand allowed. 8. Additional ground in both appeals – Limitation 8.1. The assessee had filed an additional ground on 03/10/2023 in both appeals challenging the validity of the respective assessment orders on the ground that they were passed beyond the period of limitation prescribed u/s. 153 of the Act. In its written submissions dated 10/08/2026, the assessee expressly withdrew this additional ground for both assessment years, while stating that it reserved its right to raise the issue in future proceedings, if required. Accordingly, in view of the express withdrawal, the additional ground in each appeal is dismissed as withdrawn.

ITA 2302/MUM/2022 MUNCHENER RUCKVERSICHERUNGS- GESELLSCHAFT AKTIENGESELLSCHAFT IN MUNCHEN

In the result, both appeals filed by the assessee are partly allowed in the above terms. Order pronounced in the open Court on 11-09-2026

Sd/- Sd/- BIJAYANANDA PRUSETH BEENA PILLAI ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 11-09-2026 Shamik Sr. P.S.

ITA 2302/MUM/2022 MUNCHENER RUCKVERSICHERUNGS- GESELLSCHAFT AKTIENGESELLSCHAFT IN MUNCHEN Copy to: MUNCHENER DY COMM OF INCOME TAX- RUCKVERSICHERUNGS- INT TAX, CIRCLE-3(2)(2) GESELLSCHAFT ROMM NO. X, 16TH FLOOR, AKTIENGESELLSCHAFT IN AIR INDIA BLDG, NARIMAN MUNCHEN POINT UNIT 1501, THE CAPITAL, PLOT -400021, MAHARASHTRA NO.C-70, 'G'- BLOCK, BKC, BANDRA EAST, -400051, MAHARASHTRA MUNCHENER DY COMM OF INCOME TAX- RUCKVERSICHERUNGS- INT TAX, CIRCLE-3(2)(2) GESELLSCHAFT ROMM NO. X, 16TH FLOOR, AKTIENGESELLSCHAFT IN AIR INDIA BLDG, NARIMAN MUNCHEN POINT, UNIT 1501, THE CAPITAL, PLOT -400021, MAHARASHTRA NO.C-70, 'G'- BLOCK, BKC, BANDRA EAST, -400051, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE TRUE COPY

ASSISTANT REGISTRAR / SR. PRIVATE SECRETARY I.T.A.T., MUMBAI