Research activities of branch office can lead to a ‘permanent establishment’ if not characterized as preparatory or auxiliary in nature

Facts

A US based company (assessee), engaged in the business of developing and selling hybrid plant seeds around the world had a liaison office in India. The liaison office was converted into a branch office to undertake the two following activities:

• conduct agri-genetic research for the development of new products;
• Production of parent seeds and its sales to the joint venture company under an arrangement.

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