SWISS RE ASIA PTE LTD,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX, (INTERNATIONAL TAXATION) CIRCLE - 4(2)(2), MUMBAI, MUMBAI

आदेश / ORDER PER SANDEEP GOSAIN, JM: The present appeal has been filed by the assessee challenging the impugned order 17.12.2024 passed u/s 144C(5) of the Income Tax Act, 1961 (‘the Act’), by the Dispute Resolution Panel for the assessment year 2022-23. The following grounds are reproduced below:

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“1. Ground 1 The learned AO erred in law by not passing the Final Assessment Order within the time limit prescribed under section 153 of the Act which is the outer time limit for passing the final assessment order and hence, the Final Assessment Order dated 20 January 2025 which is passed after 31 March 2024 (being the time limit as per the provisions of Section 153 of the Act) is time barred and liable to be quashed. 2. Ground 2 The learned AD 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 4,000,451,665, as against INR 112,958,710 reported by the Appellant in its return of income. 3. Ground 3 The leamed 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 3,069,328,440 earned by the Appellant from its indian cedents, the Appellant has a business connection in India as per the provisions of section 9(1)(1) 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 leamed 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 21,540,090,679 earned by the Appellant from Swiss Reinsurance Company Ltd, India Branch (SRIB). 5. Ground 5 Without prejudice to Grounds of appeal No. 3 and 4, the learned AO has, on the facts and circumstances of the

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case and in law, and based on the directions of the Hon'ble DRP, erred in determining the amount of INR 3,101,194,477 as profits attributable to the alleged PE of the Appellant. 6. Ground 6 Without prejudice to Grounds of appeal No. 3, 4 and 5, the leamed 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 adopting inappropriate and unjust mechanism by considering the amount of claims pald as the only expenditure while determining the profits attributable to the alleged PE of the Appellant. 7. Ground 7 The leamed AO has, on the facts and circumstances of the case and in law, erred in holding that the income earned by the Appellant from rendering of various support services to SRIB amounting to INR 449,895,184 and to Swiss Reinsurance Global Business Solutions India Private Limited (SRGBS) amounting to INR 336,403,290 which aggregates to INR 786,298,474, are taxable in India as Fees for Technical Services (FTS) under Article 12 of the IS treaty. 8. Ground 8 The learned AO has, on the facts and circumstances of the case and in law, erred in granting short credit of Taxes deducted at Source (TDS) amounting to INR 1,273,192. 9. Ground 9 The learned AO has, on the facts and circumstances of the case and in law, erred in levying consequential interest under section 234B of the Act. 10. Ground 10 Without prejudice to ground number 10 above, the learned AO erred in considering total Interest and fee payable' of Rs 210,644,556 at sr. no. 42 of the Computation Sheet to the Assessment Order while interest levied under section 2348 of the Act is only INR 178,897,358.

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1995/Mum/2022), AY 2020-21 (ITA No. 3178/Mum/2023) and AY 2021-22 (ITA No. 4092/Mum/2023), which are reproduced below:

Relevant extract of ITAT order for the AY 2020-21 and AY 2021-22:

"21. We have carefully considered the rival submissions and perused the orders of the authorities below, the material placed on record and the case law cited at the bar. We have also minutely examined the earlier orders of the co ordinate benches in the assessee's own case for assessment years 2018-19 and 2019-20 and the series of decisions in the case of Swiss Reinsurance Company Limited and RGA International Reinsurance Company Designated Activity Company.

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which its business is carried on. The offices of SRIB and SRGBS in India belong to them and are used by them to carry on their own business as service providers. The mere rendering of services by associated enterprises in their own premises does not automatically confer disposal or control of such premises on the foreign enterprise. This proposition has been clearly laid down in the Swiss Re and RGA decisions and we see no basis to take a different view

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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, the contracts are entered into by SRIB in its own name and on its own account. The retrocession contract, as we have already noted, is directly between SRIB and the assessee and there is no evidence that SRIB or SRGBS habitually conclude contracts for the assessee with any Indian cedent.

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remunerated at arm's length for their support services, no further income can be said to accrue or arise in India either by way of business connection or permanent establishment attribution.

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business with SRIB. The reinsurance premium from indian cedents and the retrocession premium from SRIB are accordingly not taxable in India as business profits. 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 permanent establishment.

Relevant extract of ITAT order for the AY 2018-19:

"7.8 Thus, it is clear that the DRP was of the view that the issues raised were covered in favour of the Appellant by the decision of the Tribunal in the case of Swiss Reinsurance Company Limited (SRCL)...

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), we delete the additions made by the Assessing officer in view of the finding returned by the DRP that the 'impugned addition already stand adjudicated by the ITAT in the case of a sister concern in identical facts and circumstances...

Relevant extract of ITAT order for the AY 2019-20:

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"It is clear that the DRP was of the view that the issues raised were covered in favour of the appellant by the decision of the Tribunal in the case of Swiss Reinsurance Co. Ltd. v. Dy. CIT (IT Appeal No. 2759 (Mum.) of 2017 dated 4-7-2017] However, in order to keep the issue alive the DRP rejected the objections raised by the appellant. The appellant is now in appeal and has contended that the additions made should be deleted as the DRP has returned a finding that the issue stand covered in favour of the appellant by the aforesaid decision of the Tribunal. There is ment in the aforesaid contention of the appellant. The finding returned by the DRP is binding upon the Assessment Officer in terms of section 144C(13). The case now set up by the revenue, even if assumed to be meriting consideration, is contrary to the finding returned by the DRP. The revenue is not in 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

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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 result, the appeal preferred by the assessee is allowed. (Para 10) 8. As there is a categorical mention by the DRP that the material facts remain the same, therefore respectfully following the decision of the Co-ordinate Bench, we direct the AO to delete the impugned additions. Accordingly, Ground No. 2 to 7 are allowed." Hon'ble Mumbai ITAT rulings in the case of SRCL (i.e. Appellant's sister concern) 5. We further noticed that the decisions of the Coordinate Bench of ITAT for AY 2010-11 in the case of SRCL conclude the issue that arises in the present appeal too. The Tribunal, in the aforesaid decision, had to consider a similar issue where the Revenue had alleged that Swiss Re Services India Private Limited, a wholly- owned Indian subsidiary of SRCL which provided SRCL with basic market intelligence and admin support services in India was a business connection as well as a PE. However, the Tribunal negated this argument and held that SRCL neither has a business connection in India in light of Explanation 2 to section 9(1) of the Income-tax Act, 1961 ('Act') nor does it have a PE in India under the provisions

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of India-Switzerland tax treaty and, therefore, no income earned by SRCL from Indian cedents is taxable in India. The relevant extract of the order of the Tribunal for AY 2010-11 is reproduced below:

"2. Briefly stated, the facts are as under

Swiss Re-Insurance Company Limited i.e. the assessee is a company incorporated in Switzerland which receives income from providing reinsurance to various Cedants in India. The re- insurance premium received by the assessee is claimed as business income and it is further claimed that in absence of any Permanent Establishment (PE) in India the entire business income is not taxable in India.

2.1 During the course of assessment proceedings, the assessee filed necessary details and information in support of its claim. After carefully going through the information/details furnished by the assessee the AO observed that the business of the assessee is to provide reinsurance services to the clients in India. The AO further observed that in the course of such business Swiss Re- Services India Pvt. Ltd. (SRSIPL), which is an Indian Company and wholly owned subsidiary of the assessee is a PE of the assessee in India. The AO further noticed that the assessee through its Singapore Branch has entered into service agreement since 01/04/2009 with SRSIPL for obtaining risk assessment services, market insurance and administrative support in India and in turn remunerate/compensate SRSIPL on a cost+ 12% margin. The AO was of the opinion that since the assessee has remunerated SRSIPL and all its employees on a cost basis, it is clear that the personnel and staff have rendered services to the assessee as de-

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facto employees. The AO was of the firm belief that the Indian subsidiary SRSIPL 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 assessee filed a detailed reply explaining the nature of activities of the assessee. It was explained and strongly contended that services provided by SRSIPL do not create existence of a PE in India. It was explained that SRSIPL is a separate legal entity and its entire control and management is in India. The decisions regarding its business are taken and executed in India. It is both legally and functionally independent company It was explained that the employees of SRSIPL render services to SRSIPL and not to the assessee, either as assessee's employees or on behalf of SRSIPL. It was pointed out to the AO that the pricing between SRSIPL and the assessee is at arm's length. The profit earned by SRSIPL belongs to it and cannot be treated as profits of the assessee and such profits are assessed to tax in India in the hands of SRSIPL

5.5 Considering the services rendered by SRSIPL in the light of the OECD commentary, SRSIPL cannot be considered as PE of the assessee. The decision relied upon by Ld. DR do not support the Revenue on the facts of the present case, like in the case of Delhi

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Bench of the Tribunal in the case of Motorola Inc. (supra, the facts were that the employees of the assessee had worked both for the assessee as well as its Indian subsidiary. The employees also had the right to enter the office of the Indian subsidiary either for the purpose of working for Indian subsidiary or for the purpose of working for the assessee and the Indian subsidiary provided perquisite to the employees of the assessee and the assessee paid salaries to the employees, on these facts the Indian subsidiary was considered as place of business. However, facts of the case in hand clearly show that the employees of the SRSIPL has only provided services to SRSIPL and there is no noting on record to prove that the employees had provided services to the assessee or the assessee is paying their salaries or perquisites. The decision of the Hon'ble Supreme Court in the case of Morgan Stanley (supra) has been duly considered by the Hon'ble Delhi High Court in the case of E-Funds IT Solutions (supra). The decision in the case of Jebon Corporation of Indi(supra) is not at all relevant on the facts of the case in hand.

5.6 To sum up, the assessee does not have any business connection in India in the light of Explanation-2 to section 9(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..."

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Therefore, considering the totality of facts and circumstances as discussed by us above, we find that the contentions of the A.O. and DRP that SRIB and SRGBS constitute a PE (Fixed Place, Service PE and Agency PE) of SRAPL in India under the IS Tax Treaty are grossly erroneous and not in accordance with the facts of the present case. Therefore, we set aside the Assessment Order and accordingly, direct the A.O. to delete the additions made thereof. Accordingly, these grounds stand allowed. 6. Ground Nos. 5 and 6: Since we have already decided ground nos. 3 and 4 above on merits, in view of the same, these grounds become in academic in nature and needs no adjudication. 7. Ground No. 7: At the very outset, we noticed, that this ground raised by the assessee is squarely covered by the decision of Coordinate Bench of ITAT in assessee’s own case for, which are as under: 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 SRIB and SRGBS. It has held, after detailed analysis, that while the services may assist SRIB and SRGBS in their operations, they do not equip

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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 SRIB 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 Article 12 and deleted the corresponding additions.

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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 permanent establishment."

Relevant extract of ITAT order for the AY 2018-19:

"8.1....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. During the course of hearing, the Appellant had placed reliance on the decision of the Tribunal in the case of Jefferies LLC v. DCIT (ITA NO. 5674/MUM/2017), wherein it was held by the Tribunal that services provided by the group entities or holding companies to its subsidiaries as day to day management and support services to run their business would not be regarded as fees for technical services in case, such services do not make available technical knowledge, skill or experience.

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Relevant extract of ITAT order for the AY 2019-20:

"7 We find that in the earlier AY. the Co-ordinate Bench in ITA No. 1492/Mum/2022 vide order dated 17/01/2024 has held as under-

As regards the taxability of fee received by the appellant from SRCL-IB/SGB is concerned, it is noted that Assessing Officer had concluded that the services provided to SRCL-IB and SRGBS were to be chargeable to tax in India in terms of article 12 as the services are highly technical in nature which have made available the technology to SRCL-IB and SGB for further exploitation and use as income generating inputs. The DRP also observed that services provided were of enduring nature and were being provided continuously on a year-on-year basis. Hence, the same were liable to be treated as Fee for Technical Services. [Para 8)

It is noted that while examining the applicability of provisions contained in section 9(1)(vii) read with Explanation 2, the Assessing Officer had noted that even the rendering of any services by a technical or other personnel without any technology being transferred would also fall within the ambit of fee for technical services. At the same time. in the Final Assessment Order while examining the applicability of provisions contained in section 12(4) of DTAA, the Assessing Officer has noted that in order to satisfy the 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-18/SGB which enables SRCL-IB/SGB to independently perform their function without support of the appellant in the

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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) 8. Therefore, we are of the view that the support services rendered by the assessee to SRIB/SRGBS are not taxable as FTS under the IS Tax Treaty and in the absence of a PE of SRAPL in India, the said income arising to the Apellant from support services rendered to SRIB/SRGBS is not taxable in India, thus we direct the A.O. to delete the same.

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Order pronounced in the open court on 09.03.2026

Sd/- Sd/- (PRABHASH SHANKAR) (SANDEEP GOSAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 09/03/2026 RY Sr. Ps आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : अपीलार्थी / The Appellant 1. प्रत्यर्थी / The Respondent. 2. संबंधित आयकर आयुक्त / The CIT(A) 3. 4. आयकर आयुक्त(अपील) / Concerned CIT धिभागीय प्रधतधिधि, आयकर अपीलीय अधिकरण,मुम्बई/ DR, ITAT, Mumbai 5. 6. गार्ड फाईल / Guard file. आदेशानुसार/BY ORDER, सत्याधपत प्रधत //True Copy//

उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai