Re-domiciliation and dependent agent PE do not by themselves create extra Indian tax when treaty status and arm's length remuneration are established.

Re-domiciliation of a company from one offshore jurisdiction to Mauritius, by itself, did not justify denial of India-Mauritius treaty entitlement where fiscal domicile in Mauritius was not displaced and treaty benefit had been consistently accepted. On attribution of profits, where at most a dependent agent permanent establishment was alleged and the Indian agent had already been remunerated at arm's length for the functions and risks undertaken, no further profits survived for taxation in India. The dependent agent presence was therefore tax neutral, and the Revenue's grounds were rejected as infructuous.

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Issues: (i) Whether re-domiciliation of the assessee company from one offshore jurisdiction to another could, by itself, justify denial of treaty entitlement; (ii) whether, assuming a dependent agent permanent establishment existed in India, any further profits were taxable in India when the Indian agent had been remunerated on an arm's length basis.

Issue (i): Whether re-domiciliation of the assessee company from one offshore jurisdiction to another could, by itself, justify denial of treaty entitlement.

Analysis: The company had been incorporated in the British Virgin Islands and later continued in Mauritius by a certificate of incorporation by continuation. Re-domiciliation was treated as a recognised corporate continuity mechanism that preserves legal identity while shifting the place of incorporation. In the absence of any material to show that the assessee was not fiscally domiciled in Mauritius, and given the long-standing acceptance of treaty benefit in the past, the mere fact of re-domiciliation could not be used to deny treaty entitlement.

Conclusion: The objection to treaty entitlement on the basis of re-domiciliation was rejected, in favour of the assessee.

Issue (ii): Whether, assuming a dependent agent permanent establishment existed in India, any further profits were taxable in India when the Indian agent had been remunerated on an arm's length basis.

Analysis: The dispute turned on attribution of business profits under the India-Mauritius treaty. The basic fixed-place permanent establishment theory was not established on the facts, and at best the Revenue's case was one of dependent agent permanent establishment. The Tribunal followed binding precedent that, where the Indian agent has already been paid arm's length remuneration for the functions performed and risks assumed, nothing further survives for taxation in the hands of the foreign enterprise. On that footing, the existence of a dependent agent permanent establishment became tax neutral and the related grounds became academic.

Conclusion: No further profits were taxable in India, and the Revenue's appeals did not survive, in favour of the assessee.

Final Conclusion: The Revenue's appeals were rendered infructuous, while the assessee's cross-objections and rule 27 petitions succeeded to the extent indicated in the order.

Ratio Decidendi: A dependent agent permanent establishment does not give rise to additional taxable profits in the source state where the Indian agent has already been remunerated at arm's length for the relevant functions and risks.

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