Summary
FOWC’s access and control over Buddh International Circuit for the Formula One event constituted a fixed-place permanent establishment under the India–UK DTAA. Duration had to be assessed relative to the business and contractual arrangement. Only income attributable to that establishment was chargeable, with corresponding withholding; attribution and any penalty issue remained for assessment.
Issues
- Whether the circuit constituted a fixed-place permanent establishment.
- What income and withholding consequences followed.
Provisions considered
- Article 5(1), India–United Kingdom Double Taxation Avoidance AgreementThe circuit was a fixed place at FOWC’s disposal through which it conducted the event business. (¶¶ 20, 69–76)
- Section 195, Income-tax Act, 1961Withholding was confined to the appropriate income chargeable and attributable to the Indian establishment. (¶ 77–78)
Held
- Contractual access, control over entry and commercial exploitation established FOWC’s disposal of the circuit. Jaypee’s ownership and construction did not negate that control during the championship. Permanence was relative to the event business and repeated contractual arrangement. (¶ 69–76)
- The Assessing Officer must determine attributable business income. Jaypee could press its bona-fides argument against penalty at that stage; the Court expressed no view on its merits. (¶ 77–78)
- The royalty finding was unchallenged and had attained finality. Revenue’s dependent-establishment issue was academic and not examined. (¶¶ 5, 81)
Result
FOWC and Jaypee appeals dismissed subject to attribution observations; Revenue appeal disposed of as academic. No costs.