DY. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION-I) Vs. BAJAJ ALLIANZ GENERAL INSURANCE COMPANY LIMITED

JUDGEMENT

(1.) THE captioned five appeals by the Revenue are directed against a consolidated order passed by the Commissioner of Income Tax (Appeals) -I, Pune dated 08.12.2011 which, in turn, has arisen from a consolidated order passed by the Asstt. Director of Income Tax (International Taxation) -II, Pune (in short "the Assessing Officer"), u/s. 201(1) r.w.s. 195 of the Income -tax Act, 1961 (in short "the Act") dated 30.03.2009 pertaining to the assessment years 2005 -06 to 2009 -10, holding the assessee as 'an assessee in default' for non -deduction of tax at source and certain payments made to non -residents and accordingly directing the assessee to pay Rs. 34,69,791/ -.

(2.) IN brief, the relevant facts are that the respondent -assessee is a company incorporated under the provisions of the Companies Act, 1956 and is a joint venture between Bajaj Auto Limited, India and Allianz AG, Germany. The respondent -assessee is engaged in the business of general insurance and in terms thereof for the year under consideration it was engaged in Fire, Marine, Motor and Miscellaneous (Working Compensation Employers Liability, Public Product Liability, Engineering, Aviation, Health, Personal Accident, etc.) insurance businesses. In the marine insurance and aviation insurance products offered by the assessee, insurance cover is provided to compensate for the losses/damages to goods/property in transit. To settle overseas claims arising out of such policies, assessee appointed non -resident surveyors to assess the damages, so that the assessee could decide the amount to be compensated to the insured under such insurance contracts. In order to assess the damages, the surveyor's role was to carry out surveys and to assess the extent of damages to the goods belonging to the insured and issuance of survey reports to the assessee on the basis of their assessment of losses/damages. Such surveys are claimed to be carried out entirely outside of India by the non -resident surveyors and the assessee paid fee for their services, by direct remittances into their overseas bank accounts.

(3.) ASSESSEE carried the matter in appeal before the CIT(A) who has held that the said payment did not constitute either FTS or FIS in terms of the respective DTAAs and therefore, the assessee was not required to deduct tax at source. Further, the CIT(A) also considered the application of Article 12 on business profits of the relevant DTAAs and concluded that in view of the undisputed facts that the non -resident surveyors did not have any Permanent Establishment (PE) in India the payments made by the assessee to such parties were also non -taxable thereof.