Preparatory or auxiliary liaison office functions can fall outside permanent establishment status under the Indo-Mauritius tax treaty.

An Indian liaison office will not constitute a permanent establishment under Article 5 of the Indo-Mauritius tax treaty where the evidence shows that its functions are limited to coordination, logistics, communication, and supplying information, without substantial business activity being carried on from the premises. The treaty exclusion for a place of business maintained only for preparatory or auxiliary activities applies on those facts, and such a finding is treated as factual and not perverse where supported by the record. The alternative limb of Article 5 becomes academic once the principal exclusion is satisfied.

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Issues: Whether the assessee's liaison office in India constituted a permanent establishment under Article 5 of the Indo-Mauritius tax treaty, or whether its activities were only preparatory or auxiliary and therefore excluded from the definition of permanent establishment.

Analysis: The Tribunal had examined the documents gathered during survey proceedings, the functions of the employees stationed at the office, and the nature of the activities carried on from the premises. On that material, it found that the office was used for coordination, logistics, communication, and supply of information, and that no substantial business was shown to have been carried on from the office. The exclusion in Article 5(3)(e) applied because the place of business was maintained only for supplying information and for activities of a preparatory or auxiliary character. The finding was treated as one of fact based on evidence and was held not to be perverse. The alternate contention on another limb of Article 5 was held to be academic after the principal issue was answered.

Conclusion: The liaison office was not held to be a permanent establishment; the finding that its activities were preparatory or auxiliary was upheld, against the assessee and in favour of the Revenue.

Ratio Decidendi: Where the evidence shows that an Indian office carries on only coordination, communication, logistics, and information-supplying functions without substantial business activity, it falls within the treaty exclusion for preparatory or auxiliary activities and does not constitute a permanent establishment.

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