IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JM &

MS PADMAVATHY S, AM I.T.A. No. 4832/Mum/2024 (Assessment Year: 2021-22) I.T.A. No. 4833/Mum/2024 (Assessment Year: 2021-22)

Munchener Ruckversicherungs- DCIT(IT)-3(2)(2), Gesellschaft Aktiengesellschaft in Room No. 903, 9^th Floor, Munchen, 16^th Floor, Air India Building, Unit 1501, The Capital, Plot No. Vs. Nariman Point, C-70, G Block, Bandra Kurla Mumbai-400021.

Complex, Mumbai-400051.

PAN: AAFCM7537A Appellant) : Respondent I.T.A. No. 5094/Mum/2024 (Assessment Year: 2020-21) I.T.A. No. 5093/Mum/2024 (Assessment Year: 2021-22)

ACIT(IT)-3(2)(2), Munchener Ruckversicherungs-

Room No. 615, 6^th Floor, Gesellschaft Aktiengesellschaft in Kautilya Bhavan, BKC, Munchen, Vs.

Bandra East, Mumbai-400051. Unit 1101, The Capital, B Wing, Bandra East, S.O. Mumbai-400051.

PAN: AAFCM7537A Appellant) : Respondent Appellant /Assessee by : Shri P. J. Pardiwala / Jeet Kamdar, AR Revenue / Respondent by : Shri Vivek Perampurna, CIT-DR Date of Hearing : 17.03.2025 Date of Pronouncement : 15.04.2025 O R D E R Per Padmavathy S, AM:

These cross appeals by the assessee and the revenue are against the common order of Commissioner of income tax (Appeals)-57, Mumbai (in short "CIT(A)") dated 26.07.2024 for Assessment Year (AY) 2020-21 and 2021-22. The issues contended are common and hence these appeals were heard together and disposed of by this common order.

2. For the purpose of adjudication we will consider the appeal filed for AY 2020-21 by the assessee and the revenue as lead cases. The assessee is a foreign company incorporated under the laws of Germany and is engaged in providing reinsurance services. The assessee has obtained the necessary registration from Insurance Regulatory and Development Authority of India (IRDAI) for setting up in India to carry on reinsurance business. For the AY 2020-21 the assessee filed the return of income on 13.02.2021 declaring a total loss at Rs. 5,99,02,462/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. The Assessing Officer (AO) during the course of assessment noticed that the Indian Branch that is assessed to tax as PE in India has made certain payments to Head Office and has claimed the same as deduction. The AO called on the assessee to explain the nature of payment and whether the same was within the limit prescribed as per section 44C of the Income Tax Act, 1961 (the Act). The assessee made a detailed submission before the AO explaining the nature of services which included IT support services and availing of Head Office Management Services. The assessee further submitted that the expenses are incurred wholly and exclusively for the purpose of business of the Indian Branches and therefore the same is allowable under section 37 of the Act. The assessee further submitted that the amount received by the Head Office is also not taxable in India on the fundamental principle of one cannot make profit from oneself. The AO did not accept the submissions of the assessee and held that the amount paid by the Indian Branch to Head Office cannot be allowed as a deduction if the principle of mutuality as contended by the assessee when it comes to taxability in the hands of the Head Office is to be allowed. The AO further held that the payments made by the Indian Branch to Head Office are in the nature of Fees for Technical Services and is taxable as per the provisions of section 9(1)(vii) of the Act as well as under the provisions of the DTAA between India and Germany. The AO also held that considering the nature of expenditure towards which the Indian Branch has made payments to Head Office provisions of section 44C of the Act are not applicable. Accordingly the AO disallowed the payments made by the Indian Branch to Head Office under section 37 of the Act. Though the AO has discussed the taxability of the impugned receipts in the hands of the Head Office, the AO did not treat the same as taxabl