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“permanent establishment”

International TaxSection 9 / DTAA Article 5Section 9 / DTAA Article 51,497 judgments

The decision most relied on for permanent establishment is DIT v. Morgan Stanley & Co. (292 ITR 416), cited in 360 judgments on BharatTax.

Leading authorities on permanent establishment

DIT v. Morgan Stanley & Co.
292 ITR 416 · 2007 · Supreme Court
360
citing judgments

A Permanent Establishment (PE) signifies a foreign enterprise's virtual projection into another country, with a fixed place PE existing where an MNE's business is wholly or partly carried on. A dependent agent PE requires the agent to act as such and/or have the authority to conclude contracts for the foreign enterprise under DTAA provisions.

DIT v. Nokia Networks OY
358 ITR 259 · 2013 · High Court
276
citing judgments

Payments for the supply of software along with telecom equipment are not in the nature of royalty if they are for the use of a copyrighted article, not the copyright itself. Such payments are not taxable in India in the absence of a Permanent Establishment (PE).

DIT v. Infrasoft Ltd.
39 Taxmann.com 88 · 2013 · High Court
269
citing judgments

Payments for the use of copyrighted software, without the transfer of any rights in the underlying copyright itself, do not constitute 'royalty' under the Income-tax Act or tax treaties. Such payments are often treated as business income, taxable only if a permanent establishment exists.

ONGC v. CIT
376 ITR 306 · 2015 · Supreme Court
241
citing judgments

Income derived by a non-resident for services related to mineral oil operations, falling under the presumptive taxation regime of Section 44BB, cannot simultaneously be treated as fees for technical services under Section 9(1)(vii). The specific presumptive provisions override the general FTS definition, particularly when DTAA applies.

Motorola Inc. v. Dy. CIT
95 ITD 269 · 2005 · High Court
213
citing judgments

Revenue must demonstrate the existence of a Permanent Establishment (PE) of a foreign enterprise in India, including establishing that transactions underlying a Dependent Agent PE were not at arm's length. Income from the sale of goods is not taxable in India if title and risk in the goods pass outside India.

(i) Formula One World Championship Ltd. v. CIT
394 ITR 80 · 2017 · Supreme Court
200
citing judgments

This case provides foundational principles that illuminate the contours of the concept of 'Permanent Establishment' (PE) under tax treaties, especially regarding a 'fixed place' PE.

DIT v. Morgan Stanley Co. Inc.
399 ITR 34 · 2017 · Supreme Court
162
citing judgments

Once a transfer pricing analysis has been undertaken for an Indian associated enterprise, no further profits are attributable to it as a Permanent Establishment, thereby extinguishing the need for additional profit attribution.

Sir Kikabhai Premchand v. CIT
24 ITR 506 · 1953 · Supreme Court
156
citing judgments

One cannot make a taxable profit or loss from transactions with oneself, as profit only arises from dealings with external third parties, even when transferring assets between different accounts or divisions of the same entity.

Judgments citing permanent establishment

Citicorp Trustee Company Ltd As Trustee for Fccb Issued by Jindal Saw Ltd, Mumbai vs. Deputy Commissioner of Income Tax (Int Taxation)-2(1)(1), Mumbai

In the result, the appeal of the assessee is allowed

ITA 784/MUM/2023[2014-2015]Status: DisposedITAT Mumbai21 Aug 2023AY 2014-2015

Bench: Shri Aby T. Varkey, Jm & Shri S. Rifaur Rahman, Am आयकर अपील सं/ I.T.A. No. 784/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2014-15) Citicorp Trustee Company बिधम/ Dcit (International Ltd. As Trustee For Fccb Taxation)-2(1)(1) Vs. Issued By Jindal Saw Ltd. 17Th Floor, 1713, Air India Citigroup Centre, Canada Building, Nariman Point, Square, Canary Wharf Mumbai-400021. London E14 5Lb United Kingdom. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aaecc0452D (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Anish Thackar/Nikhil Tiwari/Lekh Mehta Revenue By: Shri Amit Kumar Soni (Sr. Dr) सुनवाई की तारीख / Date Of Hearing: 19/07/2023 घोषणा की तारीख /Date Of Pronouncement: 21/08/2023 आदेश / O R D E R Per Aby T. Varkey, Jm: This Is An Appeal Preferred By The Assessee Against The Order Of The Assessing Officer (Ao) Dated 19.01.2023 Passed U/S 143(3) R.W.S. 144C(13) R.W.S 147 Of The Income Tax Act, 1961 (Hereinafter “The Act”). 2. At The Outset, The Ld. Ar Of The Assessee Brought To Our Notice The Ground No. 2 Wherein The Assessee Has Raised The Legal Issue Against The Action Of The Ao To Have Reopened The Assessment U/S 147 Of The Act Without Satisfying The Essential Condition Prescribed Under The Act; & Therefore Contends That The Action Of The Ao Is Ab-Initio-Void. 3. In Order To Examine The Legal Issue Raised By The Assessee, It Is Necessary To Look Into The Reasons Recorded By Ao To Reopen The Assessment Which Is Reproduced As Under: -

For Appellant: Shri Anish Thackar/NikhilFor Respondent: Shri Amit Kumar Soni (Sr. DR)
Section 143(3)Section 147Section 201(1)Section 5(2)(b)Section 6

hereby declared that in the case of a non-resident, being a person engaged in the business of banking, any interest payable by the permanent establishment in India of such nonresident to the head office or any permanent establishment or any other part of such non-resident outside India shall ... India and 10 A.Y. 2014-15 Citicorp Trustee Company Ltd. shall be chargeable to tax in addition to any income attributable to the permanent establishment in India and the permanent establishment in India shall be deemed to be a person separate and independent of the non-resident person of which

Asst CIT 16(2), Mumbai vs. Bsr and Co., Mumbai

In the result, appeal filed by the Revenue is dismissed

ITA 362/MUM/2017[2012-13]Status: DisposedITAT Mumbai02 Aug 2023AY 2012-13

Bench: Shri Aby T. Varkey, Hon'Ble & Shri S. Rifaur Rahman, Hon'Bleacit – 16(2) V. M/S. Bsr & Company Room No. 440, 4Th Floor Lodha Excelus, 1St Floor Aayakar Bhavan, M.K. Road Appolo Mills Compound Mumbai - 400020 N.M. Joshi Marg Mumbai - 400011 Pan: Aaifb7357B (Appellant) (Respondent) V. M/S. Bsr & Company Llp Acit – 16(2) Room No. 440, 4Th Floor Lodha Excelus, 1St Floor Aayakar Bhavan, M.K. Road Appolo Mills Compound Mumbai - 400020 N.M. Joshi Marg Mumbai - 400011 Pan: Aaafb9852F (Appellant) (Respondent) Acit – 16(2) V. M/S. Bsr & Co. Room No. 440, 4Th Floor Lodha Excelus, 1St Floor Aayakar Bhavan, M.K. Road Appolo Mills Compound Mumbai - 400020 N.M. Joshi Marg Mumbai - 400011 Pan: Aaifb4734C (Appellant) (Respondent)

Section 195Section 40

nature of business profits under Article 7 of the respective tax treaties and are not taxable in India in the absence of permanent establishment of non – residents in India under Article 5 of the said tax treaties since services are not in nature of make available of technical knowledge, experience ... come under Article 12 dealing with ‘Fees for Technical Services’, rather they fall under Article 7 dealing with ‘Business Profits’ and there is no Permanent Establishment (PE) in India, and therefore these payments would not be taxable in India. 9. With regard to the remittances for professional fees to Singapore

Asst CIT 16(2), Mumbai vs. Bsr and Co. LLP, Mumbai

In the result, appeal filed by the Revenue is dismissed

ITA 361/MUM/2017[2012-13]Status: DisposedITAT Mumbai02 Aug 2023AY 2012-13

Bench: Shri Aby T. Varkey, Hon'Ble & Shri S. Rifaur Rahman, Hon'Bleacit – 16(2) V. M/S. Bsr & Company Room No. 440, 4Th Floor Lodha Excelus, 1St Floor Aayakar Bhavan, M.K. Road Appolo Mills Compound Mumbai - 400020 N.M. Joshi Marg Mumbai - 400011 Pan: Aaifb7357B (Appellant) (Respondent) V. M/S. Bsr & Company Llp Acit – 16(2) Room No. 440, 4Th Floor Lodha Excelus, 1St Floor Aayakar Bhavan, M.K. Road Appolo Mills Compound Mumbai - 400020 N.M. Joshi Marg Mumbai - 400011 Pan: Aaafb9852F (Appellant) (Respondent) Acit – 16(2) V. M/S. Bsr & Co. Room No. 440, 4Th Floor Lodha Excelus, 1St Floor Aayakar Bhavan, M.K. Road Appolo Mills Compound Mumbai - 400020 N.M. Joshi Marg Mumbai - 400011 Pan: Aaifb4734C (Appellant) (Respondent)

Section 195Section 40

nature of business profits under Article 7 of the respective tax treaties and are not taxable in India in the absence of permanent establishment of non – residents in India under Article 5 of the said tax treaties since services are not in nature of make available of technical knowledge, experience ... come under Article 12 dealing with ‘Fees for Technical Services’, rather they fall under Article 7 dealing with ‘Business Profits’ and there is no Permanent Establishment (PE) in India, and therefore these payments would not be taxable in India. 9. With regard to the remittances for professional fees to Singapore

Asst CIT 16(2), Mumbai vs. Bsr and Company, Mumbai

In the result, appeal filed by the Revenue is dismissed

ITA 360/MUM/2017[2012-13]Status: DisposedITAT Mumbai02 Aug 2023AY 2012-13

Bench: Shri Aby T. Varkey, Hon'Ble & Shri S. Rifaur Rahman, Hon'Bleacit – 16(2) V. M/S. Bsr & Company Room No. 440, 4Th Floor Lodha Excelus, 1St Floor Aayakar Bhavan, M.K. Road Appolo Mills Compound Mumbai - 400020 N.M. Joshi Marg Mumbai - 400011 Pan: Aaifb7357B (Appellant) (Respondent) V. M/S. Bsr & Company Llp Acit – 16(2) Room No. 440, 4Th Floor Lodha Excelus, 1St Floor Aayakar Bhavan, M.K. Road Appolo Mills Compound Mumbai - 400020 N.M. Joshi Marg Mumbai - 400011 Pan: Aaafb9852F (Appellant) (Respondent) Acit – 16(2) V. M/S. Bsr & Co. Room No. 440, 4Th Floor Lodha Excelus, 1St Floor Aayakar Bhavan, M.K. Road Appolo Mills Compound Mumbai - 400020 N.M. Joshi Marg Mumbai - 400011 Pan: Aaifb4734C (Appellant) (Respondent)

Section 195Section 40

nature of business profits under Article 7 of the respective tax treaties and are not taxable in India in the absence of permanent establishment of non – residents in India under Article 5 of the said tax treaties since services are not in nature of make available of technical knowledge, experience ... come under Article 12 dealing with ‘Fees for Technical Services’, rather they fall under Article 7 dealing with ‘Business Profits’ and there is no Permanent Establishment (PE) in India, and therefore these payments would not be taxable in India. 9. With regard to the remittances for professional fees to Singapore