Case Law Details
Samsung Electronics Co. Ltd. Vs. DCIT (Int. Taxation)- ITAT Delhi
Analysis of the Samsung Case on the Determination of a Permanent Establishment (PE) for Services Provided by Seconded Employees of a Korean Parent to Its Subsidiary in India
This article examines the ruling of the Delhi Bench of the Income Tax Appellate Tribunal (ITAT or the Tribunal), i.e. the highest fact-finding authority under the Indian Income Tax Act (the Act), in the case of Samsung Electronics Co. Ltd. and the ramifications of that case for the interpretation of the treaty article on the determination of a permanent establishment, especially in the case of expatriate employees seconded and visiting the Indian subsidiary and the attribution of profits to a PE. The issue of reassessment proceedings under Indian law is also considered.
1. Introduction
The concept of permanent establishment (PE) is of considerable importance with the growing trend of globalization in order to facilitate reasonable and transparent taxation of cross-border transactions in this dynamic business landscape. Article 5 of the OECD Model Tax Convention[1] and the UN Model Double Taxation Convention[2] defines the term “permanent establishment”, and this definition has been adopted by countries around the world in their double taxation avoidance agreements (DTAAs) signed with other countries.
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