Permanent establishment and profit attribution under the India-Mauritius DTAA failed where arm's length remuneration covered the Indian income.

Absence of a fixed place or dependent agent permanent establishment under the India-Mauritius DTAA meant the assessee had no business connection in India, and no residual profit could be attributed to Indian operations. The associated enterprise's remuneration was accepted at arm's length, so the taxable income was fully covered in India and no further attribution of profits arose.

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Issues: Whether the assessee had a business connection or permanent establishment in India under the India-Mauritius DTAA and, if not, whether any profit could be attributed to its Indian operations.

Analysis: The assessee's transactions with the Indian associated enterprise had been accepted at arm's length. Following the earlier decision in the assessee's own case and the principles laid down on permanent establishment and attribution of profits, the absence of a fixed place or dependent agent permanent establishment meant that the Indian entity's remuneration fully covered the taxable income, leaving no residual profit to be attributed to the assessee in India.

Conclusion: The assessee had no business connection or permanent establishment in India and no part of its profits was attributable to India.

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