Treaty between India and United States – Indian decision that similar business activities do not give rise to a PE

The Income Tax Appellate Tribunal (ITAT) delivered its decision on 26 July 2013 in the case of ITO v. Pubmatic India Pvt Ltd (ITA No. 7044/MUM./2011) that a subsidiary is not a permanent establishment (PE) of its overseas parent company merely because both companies cater to each other in carrying on a similar business.

(a) Facts. The Taxpayer (i.e. Pubmatic India Pvt. Ltd.), an Indian company, is engaged in the business of providing services of internet advertising and marketing services,…