Indian tribunal rules on agency PE concept
October 08, 2007
SS Palwe, Samir Gandhi, Tehmina Latiwala and Mital Patel of Deloitte in Mumbai comment on a key transfer pricing ruling
In a recent decision that could have significant implications for companies operating in India through dependent agents, the Mumbai Tribunal held on April 20, 2007, that the income of a foreign company in India may be taxed even when the foreign company pays an arm's length remuneration to its dependent agent in India (Dy Director of Income Tax v. SET Satellite (Singapore) Pte Ltd.). Until this decision, the prevailing view in India was that the payment of arm's length remuneration by a foreign enterprise to its dependent agent extinguished the foreign company's Indian tax liability.
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