Important development from the Hon’ble Supreme Court concerning Permanent Establishment (PE) under the India–UAE DTAA

This is to share an important development from the Hon’ble Supreme Court concerning Permanent Establishment (PE) under the India–UAE DTAA.

Summary of the Ruling

• Case: Hyatt International Southwest Asia Ltd. v. ADIT (Case law attached for your reference)
• Date: 24 July 2025
• Key Outcome: The Supreme Court held that a UAE-resident hotel management company had a fixed-place PE in India under Article 5(1) of the India–UAE DTAA because the hotel premises were effectively at its disposal through long-term strategic/operational control exercised under the management/oversight agreements.
• Tax Consequence: Business profits attributable to that PE are taxable in India under Article 7.

Why this Matters

• The ruling emphasises substance over form. A dedicated office is not necessary if sustained operational control is exercised through the Indian premises.
• Service-PE duration tests do not override a finding of fixed-place PE.
• Profit attribution to the India PE applies as per law.

Who Could Be Impacted 

Foreign enterprises engaged in management/brand/strategic oversight or similar arrangements in India (including hospitality, franchising/retail, infrastructure O&M, and managed services) where operational decision-making rights are embedded in long-term agreements.

Suggested Action

If you have any such arrangements, we request you to verify your existing relationships and operating practices to assess whether a fixed-place PE exposure could arise in light of this judgment.

We remain available to help you understand how this ruling may apply to your specific facts.