Permanent establishment test under the India-UAE treaty must rest on the assessee's own facts before taxing business income in India.

Business income of a non-resident is taxable in India under Article 7 of the India-UAE DTAA only if a permanent establishment exists on the assessee's own facts. Reliance solely on an advance ruling concerning group concerns was insufficient to establish the assessee's PE. On the facts, the personnel were supplied on a principal-to-principal basis, no fixed place in India was shown to be at the assessee's disposal, the service activity did not exceed the treaty threshold under Article 5(2)(i), and the Indian entity was only a service recipient, not a dependent agent. The assessee therefore had no permanent establishment in India and the receipt was not taxable in India.

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Issues: Whether the fees received from the Indian associated enterprise were taxable in India as business income in the absence of a permanent establishment in India.

Analysis: The receipt was accepted to be business income governed by Article 7 of the India-UAE DTAA, under which taxation in India depended on the existence of a permanent establishment. The reliance placed by the tax authorities solely on an advance ruling in the case of group concerns was held to be unsustainable for determining the assessee's own PE position. On the facts, the personnel were supplied on a principal-to-principal basis, no fixed place in India was shown to be at the disposal of the assessee, the service activity did not continue beyond the treaty threshold under Article 5(2)(i), and the Indian entity was only the recipient of services, not an agent creating a dependent agent PE.

Conclusion: The assessee had no permanent establishment in India and the receipt was not taxable in India.

Ratio Decidendi: Business receipts of a non-resident are taxable in India under the treaty only if a permanent establishment in India is established on the assessee's own facts, and not merely by reliance on rulings concerning other group entities.

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