Supreme Court’s view on Permanent Establishment under DTAA

Supreme Court’s view on Permanent Establishment under DTAA

Article 5 India-UK DTAA: Entire law on what constitutes a "permanent establishment" in the context of the 'Formula One Grand Prix of India' event explained after extensive reference to case laws, OECD Model Convention and commentary by Philip Baker, Klaus Vogel and other experts - Formula One World Championship Limited vs. CIT International Taxation

The term “place of business” is explained as covering any premises, facilities or installations used for carrying on the business of the enterprise whether or not they are used exclusively for that purpose. It is clarified that a place of business may also exist where no premises are available or required for carrying on the business of the enterprise and it simply has a certain amount of space at its disposal.

Further, it is immaterial whether the premises, facilities or installations are owned or rented by or are otherwise at the disposal of the enterprise. A certain amount of space at the disposal of the enterprise which is used for business activities is sufficient to constitute a place of business. No formal legal right to use that place is required. Thus, where an enterprise illegally occupies a certain location where it carries on its business, that would also constitute a PE. Some of the examples where premises are treated at the disposal of the enterprise and, therefore, constitute PE are: a place of business may thus be constituted by a pitch in a market place, or by a certain permanently used area in a customs depot (e.g. for the storage of dutiable goods). Again the place of business may be situated in the business facilities of another enterprise. This may be the case for instance where the foreign enterprise has at its constant disposal certain premises or a part thereof owned by the other enterprise. At the same time, it is also clarified that the mere presence of an enterprise at a particular location does not necessarily mean that the location is at the disposal of that enterprise

Click detail Supreme Court Judgment - https://main.sci.gov.in/jonew/judis/44818.pdf

Diary Number                           1799-2017      

Case Number                            C.A. No.-003849-003849 - 2017

Petitioner Name                       FORMULA ONE WORLD CHAMPIONSHIP LTD

Respondent Name                     COMMISSIOER OF INCOME TAX, INTERNATIONAL TXATION-3 DELHI

Petitioner's Advocate               B. VIJAYALAKSHMI MENON

Respondent's Advocate             -

Bench                                       A.K. SIKRI,ASHOK BHUSHAN

Judgment By   

Judgment Date                       24-04-2017

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