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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

Umw Sher (L) Limited, New Delhi vs. Assesising Officer, International Taxation Circle-3(1)(1), New Delhi

In the result, appeals are allowed, as indicated above

ITA 569/DEL/2021[2012-13]Status: DisposedITAT Delhi01 Feb 2023AY 2012-13

Bench: Shri Saktijit Dey & Dr. B.R.R. Kumar

Section 115ASection 143(3)Section 144C(13)Section 44BSection 44DSection 9(1)(vi)Section 9(1)(vii)

even if in the nature of royalty, has to be treated as business profits in case of a non-resident entity not having any Permanent Establishment (PE) in India. This is so because, section 44BB does not require existence of PE. Interestingly, similar receipts falling within the definition of royalty

Inteva Products Netherlands Bv, Netherlands vs. ACIT, Circle- 2(1)(1), Intl. Taxation, New Delhi

In the result, the appeal is party allowed

ITA 7545/DEL/2017[2014-15]Status: DisposedITAT Delhi31 Jan 2023AY 2014-15

Bench: Shri G.S. Pannu & Shri Saktijit Deyassessment Year: 2014-15

Section 143(3)Section 144CSection 9(1)(vii)

received was not 3 offered as income on the plea that it is in the nature of business profit and in absence of a Permanent Establishment (PE) in India, it is not chargeable to tax. 5. After considering the submissions of the assessee, the Assessing Officer was not convinced

Tsys Card Tech Ltd, United Kingdom vs. DCIT Circle 3(1)(1) Int.Taxation, New Delhi

In the result, the appeal is allowed

ITA 2006/DEL/2022[2019-20]Status: DisposedITAT Delhi24 Jan 2023AY 2019-20

Bench: Dr. B. R. R. Kumarsh. Saktijit Dey

For Appellant: Sh. Kamal Sawhney, AdvFor Respondent: Sh. Gangadhar Panda, CIT-DR
Section 270A

Supreme Court decision. The ld DRP held that there is no dispute regarding the fact that the assessee does not have a permanent establishment in India. Accordingly, such receipts will constitute business income under Article 7 of the DTAA in line with the above-mentioned decision of Hon’ble Supreme

The ACIT, Kochi vs. M/S.Cochin Shipyard Ltd, Kochi

In the result, all the appeals by the revenue are dismissed

ITA 659/COCH/2019[2013-14]Status: DisposedITAT Cochin20 Jan 2023AY 2013-14

Bench: Smt. Beena Pillai & Ms. Padmavathy S.

For Appellant: Smt. J M Jamuna Devi, Sr. ARFor Respondent: S/Shri Rajasekharan & K. Gopi, CAs
Section 143(3)Section 14ASection 32(1)(ii)Section 32(1)(iia)Section 40

payee. The ld. AR also submitted that the services are rendered by the payee outside India and the payee does not have any permanent establishment in India to attract taxability in India for services rendered outside India. It is also submitted by the ld. AR that ITA Nos.655 to 659/Coch/2019

The ACIT, Kochi vs. M/S.Cochin Shipyard Ltd, Kochi

In the result, all the appeals by the revenue are dismissed

ITA 658/COCH/2019[2012-13]Status: DisposedITAT Cochin20 Jan 2023AY 2012-13

Bench: Smt. Beena Pillai & Ms. Padmavathy S.

For Appellant: Smt. J M Jamuna Devi, Sr. ARFor Respondent: S/Shri Rajasekharan & K. Gopi, CAs
Section 143(3)Section 14ASection 32(1)(ii)Section 32(1)(iia)Section 40

payee. The ld. AR also submitted that the services are rendered by the payee outside India and the payee does not have any permanent establishment in India to attract taxability in India for services rendered outside India. It is also submitted by the ld. AR that ITA Nos.655 to 659/Coch/2019

The ACIT, Kochi vs. M/S.Cochin Shipyard Ltd, Kochi

In the result, all the appeals by the revenue are dismissed

ITA 657/COCH/2019[2011-12]Status: DisposedITAT Cochin20 Jan 2023AY 2011-12

Bench: Smt. Beena Pillai & Ms. Padmavathy S.

For Appellant: Smt. J M Jamuna Devi, Sr. ARFor Respondent: S/Shri Rajasekharan & K. Gopi, CAs
Section 143(3)Section 14ASection 32(1)(ii)Section 32(1)(iia)Section 40

payee. The ld. AR also submitted that the services are rendered by the payee outside India and the payee does not have any permanent establishment in India to attract taxability in India for services rendered outside India. It is also submitted by the ld. AR that ITA Nos.655 to 659/Coch/2019

The ACIT, Kochi vs. M/S.Cochin Shipyard Ltd, Kochi

In the result, all the appeals by the revenue are dismissed

ITA 656/COCH/2019[2010-11]Status: DisposedITAT Cochin20 Jan 2023AY 2010-11

Bench: Smt. Beena Pillai & Ms. Padmavathy S.

For Appellant: Smt. J M Jamuna Devi, Sr. ARFor Respondent: S/Shri Rajasekharan & K. Gopi, CAs
Section 143(3)Section 14ASection 32(1)(ii)Section 32(1)(iia)Section 40

payee. The ld. AR also submitted that the services are rendered by the payee outside India and the payee does not have any permanent establishment in India to attract taxability in India for services rendered outside India. It is also submitted by the ld. AR that ITA Nos.655 to 659/Coch/2019

The ACIT, Kochi vs. M/S.Cochin Shipyard Ltd, Kochi

In the result, all the appeals by the revenue are dismissed

ITA 655/COCH/2019[2009-10]Status: DisposedITAT Cochin20 Jan 2023AY 2009-10

Bench: Smt. Beena Pillai & Ms. Padmavathy S.

For Appellant: Smt. J M Jamuna Devi, Sr. ARFor Respondent: S/Shri Rajasekharan & K. Gopi, CAs
Section 143(3)Section 14ASection 32(1)(ii)Section 32(1)(iia)Section 40

payee. The ld. AR also submitted that the services are rendered by the payee outside India and the payee does not have any permanent establishment in India to attract taxability in India for services rendered outside India. It is also submitted by the ld. AR that ITA Nos.655 to 659/Coch/2019

Matrix Cellular International Services Ltd., New Delhi vs. JCIT, Special Range- 6, New Delhi

In the result, the appeal is partly allowed

ITA 6916/DEL/2019[2016-17]Status: DisposedITAT Delhi18 Jan 2023AY 2016-17

Bench: Sh. G. S. Pannu, Hon’Ble & Sh. Saktijit Dey

For Appellant: Sh. A. K. Khanna, CAFor Respondent: Sh. Sanjay Kumar, Sr. DR
Section 195Section 40

profit earned by a resident of Malaysia can be taxed in India only if the Malaysian entity carries on business in India through a Permanent Establishment (PE). In the facts of the present 3 Matrix Cellular International Services Ltd. appeal, admittedly, the Malaysian entity does not have ... taxable in the source country only if the resident of the other country carries on business in the source country through a Permanent Establishment situated therein. In the facts of the present appeal, admittedly, the Bangladesh entity has no PE in India. Therefore, income, if considered to be business profit

Inter Continental Hotels Group (Asia Pacific) Pte Ltd., Gurgaon vs. DCIT, Circle- 2(1)(1), International Taxation, New Delhi

In the result, the appeal is allowed

ITA 4608/DEL/2019[2013-14]Status: DisposedITAT Delhi11 Jan 2023AY 2013-14

Bench: Shri G.S. Pannu & Shri Saktijit Dey

Section 144C(3)

nature of royal or fees for technical services. It was accepted by the Ld. Assessing Officer that the appellant did not have a permanent establishment in India, and hence the business income could not be brought to tax under Article 7 of the India- USA DTAA, Moreover, no question

Inter Continental Hotels Group (Asia Pacific) Pte Ltd., Singapore vs. ACIT, Circle- 2(1)(1), International Taxation, New Delhi

In the result, the appeal is allowed

ITA 2986/DEL/2019[2014-15]Status: DisposedITAT Delhi11 Jan 2023AY 2014-15

Bench: Shri G.S. Pannu & Shri Saktijit Dey

Section 144C(3)

nature of royal or fees for technical services. It was accepted by the Ld. Assessing Officer that the appellant did not have a permanent establishment in India, and hence the business income could not be brought to tax under Article 7 of the India- USA DTAA, Moreover, no question

Travelport International Operations Limited, Berkshire vs. ACIT Circle-3(1)(1) International Taxation-3, New Delhi

In the result, the appeals are partly allowed

ITA 1567/DEL/2022[2019-20]Status: DisposedITAT Delhi10 Jan 2023AY 2019-20

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Dey

Section 143(3)Section 144C(13)

prejudice to the above grounds, on the facts and in the circumstances of the case and in law, iri case the Business Connection (`BC')/ Permanent Establishment (PE') is upheld, the consequential relief under section 44C should be allowed to the Appellant as per the law and the eligibility ... ground nos. 4, 5 and 6, the assessee has raised the issue of absence of business connection and Permanent Establishment (PE) in India. 5. Briefly the facts relating to this issue are, the assessee, a non-resident corporate entity, is incorporated in the United Kingdom (UK) and engaged

Travelport International Operations Limited, Berkshire vs. ACIT Circle-3(1)(1), International Taxation-3, New Delhi

In the result, the appeals are partly allowed

ITA 1566/DEL/2022[2018-19]Status: DisposedITAT Delhi10 Jan 2023AY 2018-19

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Dey

Section 143(3)Section 144C(13)

prejudice to the above grounds, on the facts and in the circumstances of the case and in law, iri case the Business Connection (`BC')/ Permanent Establishment (PE') is upheld, the consequential relief under section 44C should be allowed to the Appellant as per the law and the eligibility ... ground nos. 4, 5 and 6, the assessee has raised the issue of absence of business connection and Permanent Establishment (PE) in India. 5. Briefly the facts relating to this issue are, the assessee, a non-resident corporate entity, is incorporated in the United Kingdom (UK) and engaged

ACIT, International Taxation, Circle 3(1)(2), New Delhi vs. Sabre Decision Technologies International Llc, Usa

In the result, the appeal of the revenue is dismissed

ITA 7354/DEL/2017[2013-14]Status: DisposedITAT Delhi03 Jan 2023AY 2013-14

Bench: Sh. Saktijit Deydr. B. R. R. Kumar

For Appellant: Sh. Tarandeep Singh, AdvFor Respondent: Sh. Gangadhar Panda, CIT-DR
Section 234ASection 44DSection 9Section 9(1)(vi)

That on facts and in law the AO / DRP have erred in holding / upholding that the appellant has a Permanent Establishment (PE) in India. 2.1 That on facts and in law the AO erred in presuming that appellant has admitted existence of PE in India. 3. That on facts ... that it constitutes both a business connection in India within the meaning of Section 9 of the I.T Act, 1961 and also a Permanent Establishment ('PE’) in India within the meaning of Article 5 of the DTAA between India and USA. 11. The assessee in its notes to computation

Sabre Decision Technologies International Llc, New Delhi vs. ACIT, International Taxation, Circle 3(1)(2), New Delhi

In the result, the appeal of the revenue is dismissed

ITA 5782/DEL/2017[2014-15]Status: DisposedITAT Delhi03 Jan 2023AY 2014-15

Bench: Sh. Saktijit Deydr. B. R. R. Kumar

For Appellant: Sh. Tarandeep Singh, AdvFor Respondent: Sh. Gangadhar Panda, CIT-DR
Section 234ASection 44DSection 9Section 9(1)(vi)

That on facts and in law the AO / DRP have erred in holding / upholding that the appellant has a Permanent Establishment (PE) in India. 2.1 That on facts and in law the AO erred in presuming that appellant has admitted existence of PE in India. 3. That on facts ... that it constitutes both a business connection in India within the meaning of Section 9 of the I.T Act, 1961 and also a Permanent Establishment ('PE’) in India within the meaning of Article 5 of the DTAA between India and USA. 11. The assessee in its notes to computation

Pdr Solutions Fzc, Mumbai vs. Dy.Comm of Income Tax - Circle (Intl Tax) 3(3) (2), Mumbai

ITA 1856/MUM/2022[2018-19]Status: DisposedITAT Mumbai30 Dec 2022AY 2018-19

Bench: Shri G.S. Pannu & Shri Sandeep Singh Karhail

For Appellant: Shri Porus Kaka a/wFor Respondent: Shri Amit Kumar Soni
Section 143(3)Section 144C(13)Section 144C(5)Section 9Section 9(1)(vi)

evidence in support of its contention that there shall not be any addition made on account of Sponsorship Income due to the absence of Permanent Establishment in India. The assessing officer (AO) erred in law and in the fact that the income from Sponsorship is taxable as 'Business income' under

Pdr Solutions Fzc, Mumbai vs. Dy.Comm of Income Tax - Circle (Intl Tax) 3(3) (2), Mumbai

ITA 1855/MUM/2022[2017-18]Status: DisposedITAT Mumbai30 Dec 2022AY 2017-18

Bench: Shri G.S. Pannu & Shri Sandeep Singh Karhail

For Appellant: Shri Porus Kaka a/wFor Respondent: Shri Amit Kumar Soni
Section 143(3)Section 144C(13)Section 144C(5)Section 9Section 9(1)(vi)

evidence in support of its contention that there shall not be any addition made on account of Sponsorship Income due to the absence of Permanent Establishment in India. The assessing officer (AO) erred in law and in the fact that the income from Sponsorship is taxable as 'Business income' under

M/S. Partners Medical International Inc., Mumbai vs. The DCIT (Intl Tax) -3(3) (2), Mumbai

In the result, the appeal by the assessee is partly allowed for statistical purposes

ITA 1737/MUM/2020[2011-12]Status: DisposedITAT Mumbai29 Dec 2022AY 2011-12

Bench: Shri G.S. Pannu & Shri Sandeep Singh Karhail

For Appellant: Ms. Chandabi Shah a/wFor Respondent: Shri Amit Kumar Soni
Section 143(3)Section 144C(13)Section 254

teaching services by virtue of Article 12(5)(C)of the DTAA. Ground No. 4 Business profits not taxable in the absence of a Permanent Establishment in India On the facts and circumstances of the case, and is law, the learned DCIT erred in not appreciating that, the payments received ... nature of „Business Profits' and hence, not taxable in India under Article 7 of the DTAA in the absence of a Permanent Establishment in India (under Article 5 of the DTAA). M/s. Partners Medical International Inc. ITA no.1737/Mum./2020 The Appellant prays that the learned DCIT be directed to hold

Owens-Corning(Singapore)Pte.Ltd., Mumbai vs. The Deputy Commissioner of Income-Tax (Internatioal Taxation) Circle-3(2)(2), Mumbai

In the result, appeal of assessee is allowed

ITA 6529/MUM/2018[2015-16]Status: DisposedITAT Mumbai26 Dec 2022AY 2015-16

Bench: Shri Amit Shukla & Shri Gagan Goyal

For Appellant: Ms. Megha Shah, ARFor Respondent: Sh. Soumendu Kumar Dash, Sr. DR
Section 234Section 234BSection 9(1)(vii)

assessee has claimed this income as exempt stating that income not taxable in India as the assessee has neither any permanent establishment in India as per Article 5 of India Singapore Treaty nor any business connection in India. 4. The 'Bushings are being used in the process of manufacture ... offered the same for taxation stating that these fabrication charges received are not taxable in India since the company does not have any Permanent Establishment or Business Connection in India. Also these charges are not for any equipment and hence cannot be said to be Royalty in terms of Article

General Electric Company, Mumbai vs. Asst DIT (It) 3(1), Mumbai

In the result, the appeal of the assessee for Assessment Year 2001-02 is allowed and the appeal of revenue for A

ITA 82/MUM/2011[2001-02]Status: DisposedITAT Mumbai23 Dec 2022AY 2001-02

Bench: Shri Aby T Varkey & Shri M Balaganeshm/S. General Electric Company, C/O Kpmg, Lodha Excelus, Apollo Mills Compound, N.M. Joshi Marg, Mahalaxmi, Mumbai-400011 Pan Aaacg5399M …Appellant. Vs. Asst. Director Of Income Tax, (International Taxation)-3(1), Room No.136, 1St Floor, Scindia House, N M Road Ballard Estate, Mumbai-400038. ….Respondent. Dy. Commissioner Of Income Tax, International Taxation-3(1), Mumbai-400 038 ….Appellant. Vs. M/S. General Electric Company, Mahalaxmi, Mumbai. ….Respondent. Assessee By : Shri Percy Pardiwala, Ms. Fereshte Sethna, Shri Mrunal Parekh, Shri Abhishek Tilak & Shri Ameya Pany. Revenue By : Ms. Surabi Sharma, Cit D.R. Shri Sunil Umap, Cit- D.R. Date Of Hearing : 15.12.2022 Date Of Pronouncement : 23.12.2022

For Appellant: Shri Percy PardiwalaFor Respondent: Ms. Surabi Sharma, CIT
Section 139Section 143Section 143(3)Section 147Section 148Section 5Section 9

Taxation Avoidance Agreement entered into between India and USA (Tax Treat). It did not have any presence in India so as to constitute a Permanent Establishment within the meaning of Article 5 of the Tax Treat and consequently, was not liable to tax in India in respect of the offshore ... providing such services will certainly earn profits on the activities. The activities indicate that the GEIOC is carrying out business in India through a Permanent Establishment (PE) and the income attributable to such PE is taxable in India. The company has not filed return of income for any year