Permanent establishment: project activity may not create PE in a year; tax applies in the other year on income arising then.

The Protocol defines fiscal year as the "previous year" under Indian law, treats income from alienation of immovable property as covered by Article 6(1) and equates "alienation" with "transfer" under Indian taxation law. It provides that where a site, project or activity spans two taxable years, no permanent establishment exists in a year in which activity periods aggregate below the treaty threshold, while a PE exists in the other taxable year and tax applies there only to income arising in that year. The Protocol also preserves a Contracting State's right to tax resident income attributable to partnerships, trusts or controlled foreign affiliates.

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