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2018 (6) TMI 556 - AAR - Income TaxFixed Place PE - essential ingredients of a Service PE - services rendered to the Applicant company by its Indian affiliate viz. Aramco India - India and Kingdom of Saudi Arabia DTAA - ALP determination - appellant owned oil company of the Kingdom of Saudi Arabia - Held that:- The Revenue has indeed laboured hard to point out each of the clauses of the services to be rendered under the original Services Agreement and the Proposed Addendum, to make out its case that Aramco India was acting as an agent of the Applicant in India. Two things work against this position taken by the Revenue. Firstly, that Aramco India is a separately incorporated legal and taxable entity, and by virtue of para (8) of Article 5 of the DTAA, it does not automatically become a PE of the Applicant, and secondly, Clause 3 of the Proposed Addendum expressly excludes such activities from being carried out by Aramco India that can make it an agent of the Applicant. Based on the nature of business support / marketing support activities proposed to be undertaken by the Indian affiliate entity viz. Aramco Asia India Private Limited (Aramco India), as listed in the Statement of relevant facts (Annexure III) Aramco India would not create a Permanent Establishment (PE) for the Applicant in India under Article 5 of Double Taxation Avoidance Agreement between India and Kingdom of Saudi Arabia, where such activities of Aramco India are duly compensated on an Arm’s Length basis in accordance with the Indian transfer pricing laws and regulations.
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