{"id":5034,"date":"2012-06-09T09:44:19","date_gmt":"2012-06-09T09:44:19","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=5034"},"modified":"2012-06-09T09:44:19","modified_gmt":"2012-06-09T09:44:19","slug":"in-re-aramex-international-logistics-pvt-ltd-aar-a-subsidiary-created-for-indian-business-is-a-pe-of-the-foreign-parent","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/in-re-aramex-international-logistics-pvt-ltd-aar-a-subsidiary-created-for-indian-business-is-a-pe-of-the-foreign-parent\/","title":{"rendered":"In Re Aramex International Logistics Pvt Ltd (AAR)"},"content":{"rendered":"\n\n
Click here to download the judgement (aramex_subsidiary_PE.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n

A subsidiary created for Indian business is a PE of the foreign parent
\n<\/strong><\/p>\n

The applicant, a Singapore company, entered into an agreement with an Indian group subsidiary company for the performance of shipment transport services within & outside India. The agreement was on a principal to principal basis<\/em>. The applicant claimed that as it had no office, equipment, employee or agent in India and did not carry out operations in India, it did not have a PE in India<\/em> and no part of the receipts from outbound and inbound consignments was taxable in India. HELD by the AAR:<\/p>\n

(i) A “permanent establishment” is something which enables a non-resident to carry on a part of its whole business in a particular country. The Aramex group could not have done business in India without a presence in India<\/strong>. This presence in India can be achieved through an independent entity or through a subsidiary. If the entity is an independent & uncontrolled entity, then there is no PE if the requirements in Article 5(2) of the DTAC are not satisfied. However, if a 100% subsidiary is created for the purpose of attending to the business of the group, the subsidiary must be taken to be a PE of the group in India applying common sense<\/strong>. <\/p>\n

(ii) As the subsidiary has a fixed place of business<\/strong> in India and the business of the applicant is carried on through it, the definition in Article 5(1) is satisfied. The subsidiary is also a PE under Article 5(8) because it habitually secures orders<\/strong> in India wholly for the Aramex group and concludes contracts<\/strong> for the group. The exception in Article 5(10) that the fact that a subsidiary carries on business shall not of itself constitute that company a PE of the foreign company does not apply because it is not a case of the subsidiary carrying on “its business” in India but it is a case of the entire group carrying on business in India through the subsidiary<\/strong>. Also, the fact that the agreement refers to the subsidiary as “independent” and “non-exclusive” is not relevant because it is a mere camouflage<\/strong> to screen the fact that the subsidiary is really a PE of the applicant’s group in India. <\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

A “permanent establishment” is something which enables a non-resident to carry on a part of its whole business in a particular country. The Aramex group could not have done business in India without a presence in India<\/strong>. This presence in India can be achieved through an independent entity or through a subsidiary. If the entity is an independent & uncontrolled entity, then there is no PE if the requirements in Article 5(2) of the DTAC are not satisfied. However, if a 100% subsidiary is created for the purpose of attending to the business of the group, the subsidiary must be taken to be a PE of the group in India applying common sense<\/strong><\/p>\n

Read more ›<\/a><\/div>\n

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