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moreDear Sir/ Madam,
We are pleased to share with you our captioned Newsflash on the recent decision of the Hon’ble Supreme Court in the case of Hyatt International Southwest Asia Ltd., which addresses significant aspects of Permanent Establishment (PE) determination under the India–UAE Double Taxation Avoidance Agreement (DTAA).
In this ruling, the Court upheld the existence of a Fixed Place PE in India based on the Taxpayer’s substantive strategic and operational control over hotel premises in India. The Court laid down particular emphasis on the “disposal test”, clarifying that a foreign enterprise need not have legal ownership or exclusive access to a physical space for it to constitute a PE, provided it has the ability to carry on its business activities from that location.
The judgment reiterates that the assessment of PE must be based on economic substance and functional realities, rather than the formal structure or wording of underlying agreements.
This decision may have implications for:
• Cross-border service arrangements, particularly those involving strategic oversight or operational involvement;
• Multinational enterprises operating in India through management or brand-compliance roles;
• Tax planning and risk assessments involving rotational staff presence or shared infrastructure.
We trust this analysis will be useful in evaluating potential PE exposure and structuring considerations under Indian and treaty law.