Case Law Details
DDIT Vs Yum! Restaurants (Asia) Pte. Ltd. (ITAT Delhi)
The issue which is arising in the present appeal is whether there is DAPE. The Assessing Officer has alleged the existence of DAPE on account of alleged marketing activities undertaken by Indian entity on behalf of the assessee company. The case of the assessee before us is that it is an entity in Singapore and has entered into TLA with only YRIPL, which was in charge of operations of Pizza Hut & KFC restaurants in India. In order to run its business, YRIPL had franchised different outlets and was also running own stores. Yum! Restaurants Marketing Pvt.Ltd. (in short “YRMPL”) was set up for undertaking AMP activities on behalf of YRIPL and its franchisees. The assessee company was not a party to this Agreement which was exclusively between the Indian concern and its marketing company. The Assessing Officer was of the view that the marketing activities also benefit the assessee company and hence DAPE.
The condition which needs to be fulfilled in Article 5(8) of the DTAA between India and Singapore for holding of DAPE and the same reads as under:-
8. “Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an agent of an independent status to whom paragraph 9 applies – is acting in a Contracting State on behalf of an enterprise of the other Contracting State that enterprise shall be deemed to have a permanent establishment in the first-mentioned State, if-
(a) he has and habitually exercises in that State an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise;
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