Permanent establishment and dependent agent tests failed; profits were not taxable in India under the treaty.

No permanent establishment arose in India where software installed at agents' premises did not itself create a taxable presence, the agents acted in the ordinary course of their business, their activities were not wholly or almost wholly devoted to the assessee, and the arrangements were on arm's length terms. The agents also lacked, and did not habitually exercise, authority to conclude contracts on the assessee's behalf, so they were not dependent agents. In the absence of a PE, profits could not be attributed to India under Article 7 of the India-USA DTAA, and the Revenue's grounds were rejected.

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Issues: Whether the assessee had a permanent establishment in India, whether the Indian agents constituted a dependent agent permanent establishment, and whether profits attributable to the Indian operations were taxable in India under Article 7 of the India-USA DTAA.

Analysis: The appeal was decided by following the Tribunal's earlier orders in the assessee's own case for prior assessment years. The same factual matrix was found to prevail, and the Tribunal adopted the earlier findings that the software installed at the agents' premises did not by itself create a permanent establishment, the agents acted in the ordinary course of their business, their activities were not wholly or almost wholly devoted to the assessee, and the arrangements were on arm's length terms. It was also found that the agents did not have, and did not habitually exercise, authority to conclude contracts on behalf of the assessee. In the absence of a permanent establishment in India, attribution of business profits to India under Article 7 could not survive.

Conclusion: The assessee had no permanent establishment in India, the agents were not dependent agents, and no profits were exigible to tax in India on that basis; the Revenue's grounds were rejected.

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