The Supreme Court upheld the High Court’s finding that the UAE assessee had a fixed place permanent establishment in India, as the hotel premises were effectively at its disposal and it exercised continuous operational control, oversight and compliance powers under the strategic oversight services agreement, coupled with profit-linked remuneration. The clear and enduring commercial nexus with the hotel’s core functions satisfied the disposal test under Article 5(1), and income attributable to such PE was taxable in India, irrespective of the assessee’s overall losses. (AY. 2009-10 to 2014-15, 2016-17, 2017-18).
Hyatt International Southwest Asia Ltd v. Addl. CIT (2025) 478 ITR 238 / 306 Taxman 241 (SC) Editorial : Hyatt International Southwest Asia Ltd v. Add. CIT(2024) 464 ITR 508 (Delhi)(HC), affirmed.
S. 9(1)(i) : Income deemed to accrue or arise in India-Business connection-Non-resident-Permanent establishment-Disposal test-Fixed place PE-High Court correct in concluding that assessee’s ability to enforce compliance, oversee operations, and derive profit-linked fees from hotel’s earnings demonstrated clear and continuous commercial nexus and control with hotel’s core functions which satisfied conditions necessary for constitution of fixed place permanent establishment Income received under strategic oversight services agreement attributable to such permanent establishment and taxable in India-DTAA-India-United Arab Emirates (1994) 205 ITR 49 (St). [S. 9(1)(iv), 9(1)(vi), 9(1)(vii), Art. 4, 5(1), 12]
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