India: No permanent establishment under India-Singapore tax treaty (tribunal decision)

A tribunal decision concerning permanent establishment under India-Singapore tax treaty

A tribunal decision concerning permanent establishment under India-Singapore tax treaty

The Delhi Bench of the Income-tax Appellate Tribunal held that an Indian entity did not constitute a fixed place permanent establishment of the taxpayer in India under the India-Singapore income tax treaty because the sales effected by the Indian entity were on its own independent status.

The case is: AB Sciex Pte Ltd. v. ACIT.

The tribunal found that the products purchased by the Indian entity and kept in its inventory could not be considered products belonging to the taxpayer. Rather, the sales transactions were on a principal-to-principal basis for resale by the Indian entity to Indian customers. In addition, the taxpayer did not have a warehouse or sales outlet in India to constitute a fixed place permanent establishment in India under Article 5(1) of the treaty.

Further, the tribunal held that the Indian entity could not be treated as dependent agent permanent establishment of the taxpayer under the treaty since it was not habitually exercising authority to conclude contract on behalf of the taxpayer.

Read a May 2022 report [PDF 582 KB] prepared by the KPMG member firm in India

 

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.