India: Portion of service fee from single contract attributable to PE taxable in India (High Court decision)
Bifurcated portion of service fee is taxable in India as business income
Bifurcated portion of service fee is taxable in India as business income
The Delhi High Court held that that to the extent a service fee arising from a single contract is attributable to a nonresident’s permanent establishment (PE) in India, the bifurcated portion of such fee is taxable in India as business income.
The remaining part of the service fee could be taxed as a fee for technical services (FTS), but in the case before the court, the services did not satisfy the “make available” test of the FTS article under the India-UK tax treaty and thus were not subject to tax in India as FTS.
The case is: International Management Group (UK) Limited v. CIT
Read a July 2024 report prepared by the KPMG member firm in India
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