AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (6) TMI 556
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....nt of Saudi Arabia. 2.1 Its operations span the globe and include oil exploration, production, refining, chemicals, distribution and marketing. All these activities of the company are monitored by the Saudi Arabian Ministry of Petroleum and Mineral Resources together with the Supreme Council for Petroleum and Minerals. India is one of the biggest markets for Saudi oil, and Saudi Arabia has been the top supplier to India for the past many years starting in April 2001, according to the government data. 2.2. Presently, Saudi Aramco is making offshore crude oil sales to Indian refineries like HPCL- Mittal Energy Limited, Hindustan Petroleum Corporation Limited etc., from outside India such that the title to such crude oil passes to customers outside India on a Free on Board ('FOB') basis; and payment is received by Saudi Aramco in a designated bank account outside India. All crude oil sales are completed by Saudi Aramco from outside India and it does not have any office in India. 2.3 To expand its India operations and for having a long term presence, Saudi Aramco has established a Subsidiary company in India viz. Aramco Asia India Private Limited (Aramco India), incorporated a....
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....ough this application was admitted by this Authority on 16.08.2016, after considering all facts and circumstances, the Ld. CIT (DR), Mrs Kavita Pandey, speaking for the Revenue has submitted detailed arguments to say that the same is not maintainable and no Ruling regarding the existence or otherwise of a PE can be given. The reasons given for this stand are, briefly, as under: 4.1 There is no transaction at present which can be examined for the purpose of giving the Ruling, as required by section 245N(a)(i). Aramco India, has not yet started any operations in India and its roles and functions are still to be finalised. No details of the services have been provided. Clause (c) to Para 1 of the Services Agreement indicates that the scope is open-ended, whereas as per section 245S there should be a specific transaction. Cases of Royal Bank of Canada, AAR 816 of 2009, Ms Meenu Sahi Mamik, 206 CTR, AAR, 396 of 2006 and Trade Circle Enterprise LLC, AAR 1242 of 2012 have been cited. 4.2 The Applicant has suppressed the Original Service Agreement of 01.08.2016, and is seeking to sever the Proposed Addendum from the Original Service Agreement whereas they are the same agreement as pe....
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....f Sections 245N(a)(i) read with Section 245S(1) makes it clear that only "transaction" and "proposed transaction" on which ruling has been sought would get covered and would be binding on the parties mentioned in Section 245S(1) of the Act. As per Section 92F(v), even if not written, the term "transaction" would be covered under section 245N(a)(i). It is to be noted that it is not a judgment in rem, but rather a judgment in personam; that is, the ruling applies on a case-by-case basis, not universally. In support of its contentions the Applicant has taken support from the cases of Danfoss Industries Pvt. Ltd. (AAR No. 606 of 2002); Cable & Wireless Networks India Private Limited (A.A.R. No. 786 of 2008); ABB Limited (AAR No. 834 of 2009),and Areva T&D India Limited (AAR No. 876 of 2010). 5.2 Regarding the activities it is submitted that Aramco India has already started operations in India during FY 2016-17 and is rendering (a) Procurement, Sourcing and Logistic Support; and (b) Quality Inspection Support services to the Applicant and other affiliates in pursuance of the Service Agreement dated 01.08.2016. The Services Agreement contains the detailed description of such services ....
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....bsidiary, namely Aramco Overseas Company BV ("AOC"), it is submitted that this is completely misplaced as AOC was an independent affiliate entity engaged in undertaking its business activities in India through its branch office. This is a new and separate entity. Unlike that case, in this case the relevant agreements in respect of which the Ruling is being sought were already placed on record, before it was admitted. 5.7 In conclusion it is submitted that if the Revenue's objection is upheld, the basic object of setting up the AAR would itself be totally frustrated because then, there would be hardly any case at all where the AAR could be approached for a ruling. In any event, the maintainability of the Application has already been upheld by this Hon'ble AAR by its order dated 16 August 2016 and that issue cannot be raised again at this juncture, as laid down by the Hon'ble Andhra Pradesh High Court in the case of Sanofi Pasteur (supra). 6. We have considered the above arguments with reference to the Revenue's objections on maintainability of the application. At the very outset we may state that this application was admitted by this Authority on 16.08.2016 after due deliberat....
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....nt. The entire agreement has been placed on record, as also the Proposed Addenda which is a follow up of Clause 1(c) of the Services Agreement, which was on record when the application was admitted under section 245R(2). Clause 11 also speaks of the entire agreement being one. 6.4 As regards the reference to our earlier ruling of 12.03.2010 in Aramco Overseas Company BV, (AOC), unlike that case, in the present case the Services Agreement and the Proposed Addenda were filed and duly considered before admitting the application. Once this new subsidiary has come into existence, with a new set of agreements with the parent, we are not concerned with any earlier branch office. 6.5 We are unable to get any support from the cases cited by the Revenue as the facts are materially different. In the present case the agreements are very much on record, there are concrete and clearly outlined details of services, some of the activities have already commenced, and there is nothing fictional. On the other hand we have numerous cases where we have entertained and admitted cases on a similar footing, such as those of Danfoss Industries Pvt. Ltd. (AAR No. 606 of 2002); Cable & Wireless Network....
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.... any additional question not set forth in the application, but in deciding the application the Authority shall at its discretion consider all aspects of the questions set forth as may be necessary to pronounce a ruling on the substance of the questions posed for its consideration.' Thus, the Authority has not only the power but the duty to look at 'all aspects of the questions set forth' which would enable it to pronounce a ruling 'on the substance of the questions posed for its consideration'. Proceeding on the assumption that one part of the agreement has no bearing on the other would be a highly untenable proposition, especially as in the present case we find that the Proposed Addendum is a part of the Services Agreement, especially as laid out in clause 11, even though comprising of a different set of services. Though the Ld. Sr. Counsel for the Applicant has maintained throughout that only the Proposed Addendum, on which the question is framed, is required to be examined, he has furnished detailed responses in respect of both during the course of these proceedings, which have been examined. 8. Let us now come to question. The Revenue has submitted detailed reports to say....
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....of petrochemical sales and marketing, as well as office expenditures. With regard to Mr. Khalaf Khalifa A Al Awwad, the information available on the website dated April 2, 2015, was that he was the Director of Aramco Overseas Company B.V and is the Director of Aramco India Pvt Ltd. He is approving and signing various contracts. Hence, Aramco India is submitted to be the Agency PE of Aramco Saudi. 8.4 With regard to paras 12.1, 12.2 and 12.5 of the Articles of the Association of the Indian subsidiary it is stated that the power and control of the company shall vest in the Board which may delegate such powers to any Director or a committee of Directors; make regulations and that they shall hold office unless they voluntarily resign. 8.5 The Revenue argues that from the above clauses it becomes clear that the entire control and management of the company vests in the Board of Directors and the Directors of the Company can enter into contracts. Since, all the functions of the Indian Subsidiary are under the control and management of Saudi Aramco, the place of business of Indian Subsidiary is the fixed place PE of Saudi Aramco. Further, since the activities of the Indian subsidiary....
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....y receiving services and not rendering any services. In any event, the Director of Aramco India who resides in Beijing is not an employee of the Applicant, and this Director cannot be said to be rendering any services to any customer of the Applicant in India. Hence, no Service or Agency PE can possibly be said to exist in the present case. Similar is the position with regard to the other Directors. 9.2 For each of the 3 possible PEs, the Applicant has responded as under: 9.2.1 Fixed Place PE This is covered by Article 5(1) of the DTAA, and there are three requirements which have to be conjunctively established in order that a Fixed Place PE can exist. Firstly, there must be a specific identifiable fixed place of business in India; secondly, that fixed place must be put at the disposal of the foreign enterprise; and thirdly, the foreign enterprise must carry on its main business activity through that fixed place of business. Reference in this regard has been made to the decisions of the Hon'ble Supreme Court of India, in the Formula One case, 394 ITR 80 (SC), and also in the E-Funds case, 86 taxmann.com 240 (SC). 9.2.2 It is further submitted that the mere existence of ....
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.... office in India for purchase related services, such office is not considered as a fixed place PE because of the specific exclusion). Hence, even if the Services Agreement is taken into consideration, there will be no Fixed place PE. 9.3 As regards Service PE, the Applicant submits that this concept is covered by Article 5(3)(b) of the DTAA. This requires, firstly, the rendering of services by the foreign enterprise; secondly, such rendering of services must be in India to the customers of the foreign enterprise; and thirdly such services must be rendered through employees of the foreign enterprise or other personnel who have been specially engaged by the foreign enterprise for this purpose. The Hon'ble Supreme Court in the Morgan Stanley (292 ITR 416) and again in E- Funds, 86 taxmann.com 240 (SC), has explained this concept. 9.3.1 As per these decisions the essential ingredients of a Service PE are neither to be found in the original Services Agreement nor are they present in the Proposed Addendum. It is argued that in the present case, there are no services whatsoever which are proposed to be rendered by the Applicant to anybody at all. On the contrary, there are only serv....
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....A to state that the concept of "obtaining orders" has been clearly explained in the Protocol to the India - USA DTAA (pages 19-20 of the application) to mean orders which straightaway bind the foreign enterprise the moment they are accepted by the Indian entity. But Aramco India has been specifically debarred by Clause 3 of the Proposed Addendum from engaging in any such activity. It is submitted that even under the original Services Agreement, Aramco India is not permitted to conclude contracts on behalf of the Applicant. A perusal of the services stated in the agreement would make it abundantly clear that Aramco India primarily assists in identifying vendors in India, coordinating with them and undertaking quality checks etc. of materials being exported from India. Hence, the primary condition laid down by Article 5(5) will still not be satisfied. 9.4.3 Without prejudice, it is stated that even where such purchase contracts were to be concluded by Aramco India, it will still not result in creation of a PE as the "orders" referred to in Article 5(5)(c) are sales orders for the sale of the products of the foreign enterprise and not purchase orders for goods purchased by it for i....
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....g needs and requirements: No comments. (iii) Engaging with suppliers through meetings and factory visits: Against Revenue's comment that these activities are in the nature of communication and negotiation, and therefore fall in the ambit of PE, the Applicant submits that the clause is limited to engaging with suppliers through meeting and factory visits for the purpose of Procurement, Sourcing and Logistic support, and not in the nature of negotiations. (iv) Ensuring compliance of all approved suppliers with SAO's supply chain code of conduct: As per the Revenue, the word "ensuring" the compliance by Indian suppliers. Aramco India can ensure compliance only if it has authority to control the contract. The Applicants states that is an assumption that Aramco India is having "authority to control the contract". The clause merely suggest that Aramco India is entrusted with the responsibility of ensuring that all approved suppliers are compliant with SAO's supply chain code of conduct e.g. labour laws, etc. (v) Following up on orders placed by SAO with the Indian suppliers; (vi) Coordinating logistics requirements for materials exported to SAO. (vii) Making the nece....
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....t of exceptions contained in Article 5(4) of the DTAA, it is essential that a non-resident first constitutes a PE under Article 5(1) or 5(2) or 5(3) of the DTAA. Without establishing that there is a PE, it cannot be said that that the activities are not covered. c. Such other and additional services as each party may request and the requested party may be qualified and able to perform: No comments. 10.2 II. Proposed Addendum dated 01.08.2016: Marketing, Liaison and Business Supporting Function. 10.2.1 The Revenue states that these activities have very broad ambit and definitely cannot fall within the exception provided under para 4 of article 5 of Indo-Saudi DTAA. For example the visits of the dignitaries of Saudi Arabia show that these are high end activities involving specialised personnel. The news reports seem to suggest expansion of future business operations of Applicant / Group in India. However, the Applicant states that the essential requirements for constitution of Agency PE under Article 5(5) of DTAA are not present. It would be inappropriate to look at business activities of Aramco India based on news reports ignoring the Services Agreement / Proposed Addend....
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....ire communication, right from price, quantity, quality, logistics, credit policy and also "Other Agreements". This implies that Aramco India has to ensure compliance which means it has the authority to control the contract. The Applicant submits that the Indian subsidiary is to act as a communication channel and relay information from / to Applicant and Customers. There is no element of any sort of "authority to control the contract". In fact as specifically mentioned in the Proposed Addendum, the Indian subsidiary does not have any right or authority to negotiate or conclude the contract. D. Promoting awareness and public relations and meeting the business and governmental organizations to gather information or make presentations: The Revenue urges that while gathering of information may be of preparatory and auxiliary nature but Aramco India is authorised to carry out public relationship and make presentation before business associates including Governmental Organisations. This cannot be of preparatory and auxiliary in nature. The Applicant states that the concept of preparatory & auxiliary is relevant in a situation where a foreign company constitutes a PE and then w....
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....strong business relationship with the customers and there remains no other significant activity for discharging the main business operations. Hence, the sale in India is not a sale simplicitor. The Applicant argues that the maintenance of business relations with current customers is a business support function. Unless, Indian subsidiary (i.e. Aramco India) acts on behalf of Applicant and habitually concludes contracts or obtains orders from Indian Customer, an Agency PE in terms of Article 5(5) of India- Saudi DTAA would not come into existence. These services are rendered as part of its own business operations on a principal-to-principal basis. N. Seeking and facilitating new opportunities to place additional volumes by identifying new customers, potential JVs and expansion projects as well as new business opportunities: Revenue states that these activities do not fall within the exception provided in para 4 of Article 5 of Indo-Saudi DTAA. The Applicant again states that first it is essential that a non-resident constitutes a PE under Article 5(1) or 5(2) or 5(3) of the DTAA. This proposed service is akin to business support / marketing support activity relating to se....
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....able details show that the business of Aramco Saudi is being carried out in the premises of the Indian Subsidiary construing the existence of fixed place PE in India. Reference has been made to its report and paras 10 to 19 of the same to say that the business of the applicant is being carried out from the premises of Aramco India. The Applicant denies the same and states that all the tests laid down by Hon'ble Supreme Court in recent judgments in case of Formula One and E-Funds are satisfied in present case, and hence, the Applicant shall not constitute a Fixed place PE in India. 12.1 On the issue of exceptions provided in Article 5 para 3, the Revenue states that exclusion of PE under Article 5(3)(f) of Indo-US Treaty (equivalent to Article 5(4)(e) of India-Saudi ArabiaTreaty) provides exemption for carrying out activity of preparatory and auxiliary nature. In Morgan Stanley, the Indian Subsidiary was held to be carrying out activities of preparatory and auxiliary nature because the Indian entity was carrying out back office functions, whereas in the instant case the activities carried out by Aramco India is primary commercial activity. The Applicant submitted that unless a Fi....
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....Revenue's submissions on attribution of profit, the Applicant submits that in this application, it is only concerned with the formation/existence of a PE and not with the quantum of income attributable thereto. In any event, the amount of the ALP and the quantum of income attributable to the PE involve questions of valuation which cannot be raised before this Hon'ble AAR. 13. We have considered the facts of the case as submitted with the application, and the subsequent submissions of both the Revenue and the Applicant. 13.1 The issue on which the Applicant has sought a ruling from us is whether the services that will be rendered to the Applicant company by its Indian affiliate viz. Aramco India as "envisioned" in the Proposed draft of the 1st Addendum to the Service Agreement dated 01.08.2016 will give rise to a PE, within the meaning of Article 5 of the India-Saudi Arabia DTAA. However, as mentioned earlier, at the instance of the Revenue, we have considered not only the Proposed Addendum but also the main Service Agreement. 13.2 Before we discuss each of the possible PEs, let us look at the broad picture, which has to be kept in mind and has a bearing on the discussions ....
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....end. This obviously implies a restriction on the autonomy of the subsidiary's executive directors. Such a restriction, which is the inevitable consequence of any group structure, is generally accepted, both in corporate and tax laws." 13.4 We must also mention here, as we did in our recent ruling in the case of AB Holdings Mauritius II, AAR/1129 of 2011 dated 08.11.2017, that it would be inconceivable that the Holding Company would not at all be involved in the decision making of its subsidiary. Its activities have to be necessarily in consonance with the overall goals of the holding company. It cannot be expected that the Directors of the subsidiary would act with such independence that the overall objectives of the holding company themselves get compromised. And that, within the subsidiary itself, the Directors would have a persuasive influence on its decisions. Also, with immense technological advancement in the present world of communication, it is unrealistic to expect all the Directors, who may also be Directors in other group companies and in other countries, to be physically present in each and every decision making event, and communication is validly and widely done....
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.... the help of commentaries and case law. This would serve the purpose for which the AAR is set up, ie. giving certainty to the issues of taxability on the proposed transactions of the Applicant. At the same time, whatever factual details have been gathered and brought before us by the Applicant and the Revenue are considered at the appropriate places. 14. Let us now examine whether the Indian subsidiary, Aramco India can constitute a PE of the Applicant in India. 14.1 The India - Saudi Arabia DTAA, in Article 5, envisages 3 types of PEs, namely: (i) Fixed Place of Business PE, (ii) Service PE, and an (iii) Agency PE. It is the Applicant's contention that none of the three PEs is formed on the facts of the instant case. This is contested by the Revenue on various grounds, as contained in its detailed report, discussed in the preceding paras. Let us examine each of the possible PEs. 15. Fixed Place PE: Under article 5(1) of the India Saudi Arabia DTAA: ".....the term "Permanent Establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on". 15.1 This definition has been in....
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.... enterprise should be carried on from that fixed place; (iv) Support services or outsourcing work would not be sufficient to make it a permanent establishment. 15.5 The Applicant, Saudi Aramco, a state owned company, is based in Dhahran. Its supply of oil to India is made off shore from Saudi Arabia on FOB basis. Its main business and revenue earning activity of exploration, production, refining, chemicals, distribution and marketing of crude oil are all carried on in and from Saudi Arabia, and monitored by the Saudi Arabian Ministry of Petroleum and Mineral Resources together with the Supreme Council for Petroleum and Minerals. Hence, the question of any of its main or core business activities, as referred to in the E*Funds case, being done from an establishment or fixed place in India does not appear to arise. 15.6 On the other hand its subsidiary, Aramco India is incorporated in India as an independent and separate legal entity, under the Indian Companies Act, 1956, and is liable to file its returns of income and pay taxes on its income as per the Income tax Act, 1961. In view of Article 5(8) referred to earlier, though being a 100% subsidiary of the Applicant, it....
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....ion, assembly or installation project, or supervisory activities, in connection therewith, but only where such site, project or activities continue for a period of more than 182 days; (b) The furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same on a connected project) within the country for a period or periods aggregating more than 182 days within any 12-month period." 16.2 We would be concerned with sub para (b). According the above definition, the essential features of a Service PE are: (a) The foreign enterprise should be rendering a service; (b) The service should be rendered in India to the customers of the foreign enterprise; (c) The services must be rendered through employees of the foreign enterprise or other personnel who have been engaged by the foreign enterprise for this purpose; and (d) The services should be rendered for a period aggregating to more than 182 days, within a twelve month period. 16.3 This provision therefore goes beyond the fixed base concep....
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.... DTAA must be fulfilled before we can examine the status of persons mentioned by the Revenue. It has been emphasized by the Applicant that it is not rendering any services to any customer in India, either directly or through Aramco India. It is the Indian subsidiary which is providing support services like market research, gathering information on pricing, ascertaining quality of crude oil, promoting awareness, arranging meetings, maintaining databases, information on competitors, and so on to Saudi Aramco, the Applicant, and not to customers, and is being compensated by the Applicant, for these services. This appears to be somewhat opposite of what is contemplated in Article 5(3)(b), and perceived by the Revenue. 16.5 The Revenue has stated that a Director of Aramco India, Mr. Albuainain is a high dignitary of Saudi Aramco group and has the power to control the activities of the Indian subsidiary. Hence, the business of Saudi Aramco group is being carried out in India through the Indian subsidiary as the PE. Since the Directors have been appointed for perpetuity, the prescribed period provided in para 5(3)(b) becomes applicable. Clause 2(E) of the Addendum has been referred to ....
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....s only for Aramco India, being its Directors, which is providing services to the Applicant, rather than for providing services to the customers of the Applicant, since Aramco India itself is set up to provide services to the Applicant. Secondly, although they may be appointed for perpetuity, the Revenue itself states that they will be participating from outside India, ie. the management and control would be outside India. This stand not only appears to be contradictory, but also does not fit into the requirement that the employees or other personnel should be deputed to India, by the Applicant, to render the services to the customers of the Applicant in India, for more than the specified period. 16.6.1 However, the Applicant has submitted that none of the Directors are employees of the Applicant. Even, when working from China they were in the employment of other separate legal entities, and not of Saudi Aramco, the Applicant. Assuming for a while that they were employees of Saudi Aramco, even if they do render any services, firstly, they would do so as Directors of Aramco India, which is a separate and distinct legal entity. We would not be concerned with their relationship with....
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....have a PE, and liable to be taxed in India. But the real test is captured in clauses (a), (b) and (c), which determine how much and what authority the person should exercise to be termed as an Agent of the foreign enterprise. 17.2.1 Philip Baker in his commentary on Double Taxation Conventions and International Tax Law, 2nd Edition (para 33, pg163), states that: "The authority to conclude contracts must cover contracts relating to operations which constitute the business proper of the enterprise. It would be irrelevant, for instance, if the person had authority to engage employees for the enterprise to assist that person's activity for the enterprise or if the person were authorised to conclude, in the name of the enterprise, similar contracts relating to internal operations only. Moreover the authority has to be habitually exercised in the other state; whether or not this is the case should be determined on the basis of the commercial realities of the situation. A person who is authorised to negotiate all elements and details of the contract in a way binding on the enterprise can be said to exercise this authority in that state, even if the contract is signed by anothe....
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....ia that either allows or prohibits it from undertaking the above activities. We have, however seen, while discussing Service PE, that the Directors, even if employees of the Applicant, carry out the activities of Aramco India as its Directors and not for the Applicant. 17.4 The Revenue has indeed laboured hard to point out each of the clauses of the services to be rendered under the original Services Agreement and the Proposed Addendum, to make out its case that Aramco India was acting as an agent of the Applicant in India. Two things work against this position taken by the Revenue. Firstly, that Aramco India is a separately incorporated legal and taxable entity, and by virtue of para (8) of Article 5 of the DTAA, it does not automatically become a PE of the Applicant, and secondly, Clause 3 of the Proposed Addendum expressly excludes such activities from being carried out by Aramco India that can make it an agent of the Applicant. The same reads as under: "3. AAI's LIMITATIONS In performing the obligations hereto, the Parties acknowledge and agree that the following activities are explicitly excluded from the scope of the Services performed by AAI under this A....
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....the Proposed Addendum in view of Clause 7 which reads as under: "7. ALL OTHER PROVISIONS A. All provisions of the "Services Agreement" shall mutatis mutandis apply to this Addendum, which are not expressly modified. B. Except as otherwise stated in this Addendum, the terms used therein have the same meaning with the terms used in the Services Agreement." 17.8 In view of the above referred clear and unambiguous provisions and clauses in the Agreements signed between the two parties, namely Saudi Aramco and Aramco India, and the services to be rendered as per the terms of the agreements, the latter is completely prevented from doing any act that can render it to be termed as an Agent of Saudi Aramco. It is only to provide support services, as per the Proposed Addendum. Since the activities/transactions under the said Addendum are only proposed and yet to commence, as of now we cannot reach an adverse conclusion that the above limitations / preventive clauses / exclusions would not be adhered to. As per the agreements therefore, Aramco India cannot be termed as an Agency PE of the Applicant. 18. Let us also consider a couple of other arguments of the A....
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.... the response of the Applicant to the same (refer para 10 above), our views are as under: 20. I. Original Agreement Clause appearing at sl. (iii) The Revenue's use of the word "negotiation" (instead of 'engaging with' used in the clause) lends itself to an assumption that it is referring to Article 5(5), ie. authority to conclude contracts. We find it difficult to permit meanings to be assigned to words such as to unduly expand the intent conveyed by the provisions of the DTAA. While negotiating could possibly mean entering a contract, the words used in the agreement are "engaging with" which only imply having discussions or being involved in. It does not indicate an authority of a binding nature to conclude contracts, as mentioned in Article 5(5)(a) or authority to obtain orders, as in Article 5(5)(c), which are specifically prohibited by Clause 5 of the Services Agreement, being independent contractors, referred to earlier. Clauses appearing at sl. (iv) and (x) The words "ensuring" compliance by Indian suppliers and "controlling" only imply that Aramco India is expected to do its work diligently and with responsibility. It does not grant a legal right or authority to ....
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....he market, gathering customer feedback and on that basis suggest /communicate a quality and pricing structure, and other sales related information to Saudi Aramco. We do not find anything here that indicates concluding or even controlling of the contract. These are only a support provided to the Applicant and for which Aramco India is created and remunerated. Clause D The provisions in the DTAA refer to "authority" with reference to concluding contracts in the name of the foreign enterprise, and not to public relations or meeting important people, as mentioned in this clause. In any case, it cannot be assumed that in such meetings Aramco India would be concluding contracts in the name of the Applicant when it is specifically prohibited from doing so by Clause 5 of the Services Agreement and Clauses 3 and 4 of the Proposed Addendum. Hence, by performing this service, Aramco India cannot be termed as an agent of the Applicant, as this is done on its own behalf as per the role assigned to it. Also, once we have said that there is no fixed place or service PE, as per Articles 5(1), (2) or (3) there is no requirement to examine the exceptions provided in Article 5(4), including pr....
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....ia would be compensated on an Arm's Length basis as per the Indian Transfer Pricing laws and regulations. 22. In the above analysis we are caught in between two situations. On the one hand are the specific provisions of the DTAA, the clauses in the Agreements, such as Clause 5 of the Services Agreement and Clauses 3 and 4 of the Proposed Addendum, which prohibit Aramco India from doing activities that are clearly in the domain of the Applicant, such as concluding contracts or obtaining orders, and exclude all such acts that may render Aramco India a PE of the Applicant. On the other hand we have the wordings used in the different services enumerated in the two agreements, which lend themselves to varied interpretation, in the absence of material facts. However, the above discussion shows that in view of the clear exclusions and prohibitions incorporated in the two agreements, as they presently stand, Aramco India would not be rendering services or doing such acts as can deem it to be a PE of the Applicant, under Article 5 of the India Saudi Arabia DTAA. 23. As we are dealing with a question based on a Proposed Addendum, as per which the proposed transactions are envisioned, w....