Matador Legal » BPOs http://matadorlegal.com/index.php Legal Outsourcing Provider Tue, 25 Aug 2009 05:04:22 +0000 http://wordpress.org/?v=2.8.4 en hourly 1 Are BPOs considered to be Permanent Establishment (PE) in India? http://matadorlegal.com/index.php/2009/05/26/are-bpos-of-foreign-companies-considered-as-permanent-establishment-pe-in-india/ http://matadorlegal.com/index.php/2009/05/26/are-bpos-of-foreign-companies-considered-as-permanent-establishment-pe-in-india/#comments Tue, 26 May 2009 15:38:19 +0000 Matador Legal http://matadorlegal.com/index.php/2009/05/26/are-bpos-of-foreign-companies-considered-as-permanent-establishment-pe-in-india/ In a ruling by the Supreme Court of India (see DIT v. Morgan Stanley and Co., [(2007) 292 ITR 416 (SC)], it was held that a subsidiary of a Foreign Company established in India mainly for the purpose of providing limited and back office support services to the parent foreign company, cannot be considered by the Indian Tax Authority as a Permanent Establishment (PE) or Agency permanent establishment for the purpose of taxation.

The Supreme Court observed that in order to determine if a subsidiary is a PE of the foreign company, the subsidiary in India has to be established to carry out partly or wholly the main business operations of its foreign parent, and not just its preparatory or auxiliary activities (such as back office support, research, advertisement etc). Also, if the Indian subsidiary has no authority to enter into any contracts on behalf of its foreign parent, it cannot be considered as Agency PE either as its role is to only implement the contracts entered to by the foreign parent company and carry out its back office operations in India.

Source:

http://www.ibls.com/internet_law_news_portal_view.aspx?s=articles&id=2AD38226-5C35-4C9D-8799-E32692958C7D/

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