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ARTICLE · 30 JULY 2025

Operational Control Over Hotels In India Creates Hyatt UAE's 'Permanent Establishment' In India

Khaitan & Co.
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In a landmark ruling on a foreign entity's taxable presence in India, the Supreme Court in Hyatt International Southwest Asia Ltd. v Additional Director of Income-tax, 2025 INSC 891 held that the existence of sustained, pervasive, and enforceable control ...

IndiaMedia, Telecoms, IT, Entertainment
Ritu Shaktawat
Ritu Shaktawat
Megha Agarwal
Megha Agarwal
Viraj Doshi
Viraj Doshi
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In a landmark ruling on a foreign entity's taxable presence in India, the Supreme Court in Hyatt International Southwest Asia Ltd. v Additional Director of Income-tax, 2025 INSC 891 held that the existence of sustained, pervasive, and enforceable control over a hotel's strategic, operational, and financial affairs is sufficient to constitute a 'Permanent Establishment' (PE) of a foreign enterprise in India.

Background

As per the India – UAE Tax Treaty (Treaty), a foreign entity can constitute a taxable presence in the form of a PE in India if, inter-alia, (a) it has a fixed place at its disposal in India through which its business activities are being carried on (wholly or partly) (Fixed Place PE); or (b) it renders services in India through its employees or other personnel (Service PE) for a period exceeding 9-months in any 12-month period.

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