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FREE: Rolls Royce does have PE, Delhi court rules

The Delhi High Court has ruled that Rolls Royce’s operations in India created a permanent establishment and so is liable to tax.

The ruling upholds the October 2007 decision from the Delhi Income Tax Appellate Tribunal.

Rolls Royce, a UK tax resident, supplied aero-engines and spare parts to its Indian customers. Rolls Royce had a subsidiary, Rolls Royce India, which provided certain marketing related services to Rolls Royce.

The Delhi tribunal ruled that a business connection and PE existed in India and that 35% of the global profits in relation to the sales made in India were attributable to the Indian PE.

Another tribunal verdict decided that a PE existed as a result of Rolls Royce Singapore supplying repair and maintenance services, and spare parts to customers in the Indian oil and gas industry.

Rolls Royce was represented by Mukesh Butani of BMR Advisors – Taxand along with advocates Raghavendra Rao and Arijit Prasad. Sanjeev Sabarwal represented the tax authority.

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