Landmark Judgement On Permanent Establishment

High Court of Delhi (Top State Court) - Landmark Ruling on Permanent Establishment

• Progress Rail Locomotive Inc.('Petitioner') had filed 7 writ petitions [W.P.(C) No 12405/2019 to 12411/2019] before the Hon'ble Delhi High Court ('Delhi HC') against re-assessment proceedings which was initiated on the basis that the production unit of the wholly owned subsidiary of the Petitioner constitutes a Fixed Place Permanent Establishment ('PE'), in the alternative a Service PE as well as a Dependent Agent Permanent Establishment (DAPE).
• The Delhi HC deeply examined the applicable provisions of the DTAA, inter alia, with respect Fixed Place PE, Service PE and DAPE.
• Regarding Fixed Place PE, the Delhi HC inter alia, relied upon the judgments in the case of Formula One World Championship vs. Commissioner of Income Tax (2017) 15 SCC 602, Director of Income Tax (International Taxation) vs. Morgan Stanley & Co. Inc. (2007) 7 SCC 1 and Director of Income Tax II