The assessee, a public financial institution engaged in the general insurance business in compliance with statutory provisions and IRDAI regulations, had paid as reinsurance premiums to non-resident reinsurers (NRRs). The Assessing Officer disallowed the payment u/s.40 (a)(i) for non-dedication of tax at source u/s. 195. However, on appeal, the Commissioner (Appeals) deleted the disallowance, ruling in favour of the assessee. The ITAT, following its earlier decision in the assessee’s own case, upheld this view and held that the reinsurance premium paid to NRRs is not taxable in India under the Income Tax Act or relevant DTAAs, and hence the assessee was not liable to deduct TDS u/s. 195. Consequently, the disallowance u/s. 40(a)(i) was unwarranted.