In Brief
Pride Foramer S.A., a French oil-drilling company, held a 10-year contract in India (1983–1993). During a gap before securing another contract (1998), it maintained business correspondence with ONGC from its foreign offices and submitted a bid in 1996, incurring administrative and legal expenses. The tax authorities denied deductions and depreciation set-off, claiming no business was ongoing. The Supreme Court allowed the appeal, holding that a temporary business lull is not cessation. Continuous correspondence and business efforts—though unsuccessful—evidence intent to carry on business. A permanent Indian office is not required; non-resident companies can claim tax deductions based on business connection with Indian entities via foreign offices.
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