In Brief
Formula One World Championship Limited (FOWC), a UK-based Commercial Rights Holder of the F1 Championship, challenged an Authority for Advance Ruling finding that it had no permanent establishment (PE) in India. FOWC received US$40 million from Jaypee Sports International for hosting the 2011 F1 Grand Prix at the Buddh International Circuit in India. The Supreme Court upheld the High Court's reversal, holding that FOWC had a PE in India. Although the event lasted three days annually, FOWC exercised exclusive control over the circuit for six weeks (including pre- and post-race periods) via passes, broadcasting rights, and intellectual property protections under the Race Promotion Contract. Substance-over-form analysis of interconnected agreements revealed FOWC as the dominant controlling entity, not merely a licensor. The income was therefore taxable in India, and Jaypee was obligated to deduct tax at source on the portion attributable to PE activity.
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