India: Principal-to-principal distribution arrangement did not create PE (tribunal decision)
U.S. company did not have a permanent establishment in India because its subsidiary independently distributed products and services and operated at arm’s length.
august 19, 2026
The Mumbai Bench of the Income-tax Appellate Tribunal on August 18, 2026, held that a U.S. taxpayer providing financial information, news, market data, and related services through an Indian subsidiary did not have a permanent establishment (PE) in India under the India-United States income tax treaty.
The case is: Bloomberg LP v. ADIT (ITA Nos. 5529 & 5530/Mum/2014).
The tribunal found that:
- The Indian subsidiary distributed products and services on a principal-to-principal basis and independently contracted with Indian customers.
- The subsidiary did not have authority to conclude contracts, maintain stock, or habitually secure orders on behalf of the taxpayer, and therefore did not constitute a dependent agent permanent establishment (DAPE).
- Employee activities in India, including oversight, training, administrative support, and information gathering, were not shown to go beyond stewardship or auxiliary functions and did not create a service PE.
- Even if a DAPE had existed, no additional profits would have been attributable because the intercompany transactions had been accepted as arm’s length by the Transfer Pricing Officer.
Read an August 2026 report prepared by the KPMG member firm in India