INCOME TAX ACT, 1961

--Income deemed to accrue or arise in India --Under section 9(1)(vii)Reinsurer commission--Before the Tribunal the issue which arose for consideration was whether the nature of reinsurance brokerage/commission which was paid by Insurance Companies operating in India to the assessee was assessable as 'fees for technical services' within the meaning of section 9(1)(vii) read with article 13 of the India-United Kingdom (U.K.) Double Tax Avoidance Agreement ('DTAA'). The assessee-company had filed its return of income in respect of the said assessment year showing its taxable income at 'Nil'. The case was picked up for scrutiny and a notice under section 143 (2) was issued. Thereafter, regular assessment proceedings ensued. The AO had noticed that the assessee had received commission from several insurance companies operating in India. The AO required the assessee to submit a copy of the agreement with New India Assurance Co. Ltd. The agreement was entered in conjunction with J.B. Reinsurance Brokers Pvt. Ltd. and M.B. and A Page and Gems Ltd. The type of insurance was 'catastrophic excess of loss'. In the case of N India Assurance Co. Ltd., the reinsurers were H Ruckversicherung AG, CCR, Lloyd's Underwriter Syndicate, Swiss Re and Wurttembergische, London. In response to the AO's query with regard to the process by which clients were selected, the assessee submitted the information, pertaining to, N India Assurance Co. Ltd. It was also made clear by the assessee that there were occasional business visits by two or three persons from the assessee company to India to maintain general business awareness and to reinforce business contacts/ relationship in India for 15 calendar days in a year which according to them did not meet the time threshold provided in article 5(2)(k) of the India U.K. Tax Treaty. The AO also collected certain information from the website of the assessee company. According to the AO, the receipts of commission by the assessee from the said insurance companies operating in India amounted to 'fees for technical services' as defined under section 9 (1) (vii) and also under article 13(4)(c) of DTAA. In the course of the assessment proceedings, the AO had also issued a notice under section 133(6) to N India Assurance Company Ltd. to provide certain information with regard to the nature of the transaction between New India Assurance Company Ltd. and the assessee. However, despite the information, the AO came to the conclusion that the nature of payment received by the assessee came within the definition of fees for technical services as defined under the said Act as also under article 13(4)(c) of the DTAA. The CIT(A) also concurred with the view taken by the AO. Being aggrieved thereby, the assessee preferred an appeal before the Tribunal which ultimately decided in favour of the assessee by virtue of the impugned order. Held: Reinsurer commission received by foreign companies (assessee) on reinsurancing with original Indian insurer would not amount to fees for technical services as the 'make available' clause contained in article 13(4)(c) had not been satisfied in the facts and circusmtances of the present case.