In Brief
Two US companies (e-Funds Corporation and e-Funds IT Solutions Group Inc.) challenged tax assessments in India on grounds that they had no permanent establishment (PE) under the India-US Double Taxation Avoidance Agreement of 1990. The Indian revenue authority claimed the companies had a fixed place PE, service PE, and agency PE in India through e-Funds India, a 100% subsidiary. The Supreme Court held that the assessees had no PE in India. A fixed place PE requires premises 'at the disposal' of the enterprise with control thereupon; merely outsourcing to a subsidiary does not create a PE. A service PE requires services furnished to customers in India, which was absent here. The MAP settlement for earlier years was not binding on subsequent years. The burden lay on Revenue to prove PE existence, which it failed to discharge. The appeals were dismissed.
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