Treaty between India and UK – Indian decision on ascertainment of "business connection"/PE and attribution of profits

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) delivered a ruling dated 26 October 2007 in the case of Rolls Royce Plc v. Deputy Director of Income Tax (ITA Nos. 1496 to 1501/DEL of 2007) on whether activities carried out via an agent resulted in a permanent establishment (PE) under the India-UK tax treaty (the Tax Treaty) and if so, how much of the profits could be attributed to the PE.

(a) Facts. The Taxpayer (i.e. Rolls Royce Plc.) was a company…