IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E”, MUMBAI BEFORESHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER I.T.A No.2842/Mum/2025 (Assessment Year: 2017-18)

HDFC ERGO General vs DCIT, Central Circle-6(2), Mumbai Insurance Company Limited. R. No.450, 4^th Floor, 6^th Floor, Leela Business Park KautilyaBhavan, BKC, Bandra(E), Andheri Kurla Road, Andheri Mumbai-400051 J.B. Nagar S.O. Mumbai-

400059 PAN : AABCL5045N APPELLANT RESPONDENT I.T.A No.3282/Mum/2025 (Assessment Year: 2017-18)

DCIT, Central Circle 6(2), vs HDFC ERGO General Insurance Mumbai Company Limited R. No.450, 4^th Floor, 6^th Floor, Leela Business Park KautilyaBhavan, BKC, Andheri Kurla Road, Andheri J.B.

Bandra(E), Mumbai-400051 Nagar S.O. Mumbai-400059 PAN : AABCL5045N APPELLANT RESPONDENT Assessee by : ShriAbdulla Pettiwala Revenue by : Shri RiteshMisra(CIT DR)a/w Shri [

Hemanshu Joshi, (SR DR)

Date of hearing : 12/01/2026 Date of pronouncement : 20/01/2026 O R D E R Per Bench:

The instant appeal and cross appeal filed by the assessee and the revenue against the order of the Ld. Commissioner of Income-tax (Appeals)-54, Mumbai [for brevity, ‘Ld.CIT(A)’] order passed under section 250 of the Income-tax Act, 1961 (for brevity, ‘the Act) for the Assessment Year 2017-18, date of order 28/02/2025. The impugned order emanated from the order of the Learned Deputy Commissioner of Income Tax Circle 1(1)(2), Mumbai(for brevity, ‘the Ld.AO’) order passed u/s143(3)of the Act, date of order 30/12/2019.

2. The assessee has taken following grounds:

“1. The Order of the Commissioner of Income Tax (Appeals) -54, Mumbai (hereinafter referred to "the CIT(A)"] dated 28-Feb-25 passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") is bad in law since the same was passed based on the submissions made by the appellant for appeal preferred for Assessment Year 2014-15 ("AY 14- 15") without providing the appellant sufficient opportunity, thereby violating principles of natural justice.

2. The CIT(A) erred in confirming disallowance made in order under section 143(3) of the Act ("the order") passed by the Deputy Commissioner of Income Tax-1(1)(2) Mumbai, (hereinafter referred to as the "AO") amounting to Rs.34,80,23,328 under Section 37(1) of the Income tax Act, 1961 ('the Act") read with Explanation 1 thereto, being expenditure incurred for providing various administrative services / fulfilment services on the ground that it was illegal higher insurance commission paid in contravention of the provisions of section 40(1) of the Insurance Act, 1938.

3. The CIT(A) erred in confirming disallowance of Rs.34,80,23,328 under Section 37(1) of the Act read with Explanation 1 thereto, being expenditure incurred for providing various administrative services / fulfilment services on the ground that it was paid in contravention of the provisions of Guidelines on Outsourcing of Activities by Insurance Companies dated 01-Feb-11 issued by the Insurance Regulatory and Development Authority of India ("IRDAI") without any discussion in the order in this regard.

4. The CIT (A) erred in confirming the disallowance made by AO under section 40(a)(i) of the Act amounting to Rs.99,10,219, being reinsurance commission paid by Appellant to non-resident reinsurers notwithstanding that the said payments were not liable for tax deduction at source.

5. The CIT (A) erred in confirming the disallowance made by AO under section 40(a)(ia) of the Act amounting to Rs.1,61,71,012 being 30% of the amount paid by Appellant to resident reinsurers, having failed to appreciate that, the nature of the payments made was on a principal basis and not in the nature of brokerage or commission referred to in section 194H and therefore the said payments were not liable for tax deduction at source under section 194H of the Act and also ignoring that the matter is covered by judicial precedents in favour of the appellant.

6. The CIT(A) erred in not directing the AO to grant r