In case of Rolls Royce PLC v. DDIT RR-UK, supplied aero-engines and spare parts to customers in India. It had a subsidiary, RR-India, which provided certain services to RR-UK. RR-UK was marketing and selling goods to Indian customers through RR-India in India. Employees of RR-UK occupied and used the premises of RR-India during their visits in India. Indian Customers required to route the orders through RR-India office and not directly to RR-UK. Held that RR-India and its employees were soliciting and receiving orders wholly and exclusively on behalf of RR-UK and thus RR-UK has an Agency PE in India.
According to UN Model, Article 5 of the same deals with structure of permanent establishment. Article 5 (1) defines a PE and defines a basic …show more content…
According to this test, right to use the place is more evident for establishing a PE rather than the knowledge whether the place is owned, rented or otherwise at the disposal of the enterprise. This implies place for carrying out the business should be available to the enterprise without any hindrance, and for establishing the place as PE there has to be sufficient legal right. For example if a lawyer enters the agreement to handle some assessment of the client from the premises of the client, this would amount to be giving of legal right and the premises from which assessment is carried on , can be termed as PE.
The other criterion for subjective test is that the place of business should have certain degree of permanence; and therefore a place temporary in nature cannot be said as a PE. Permanence means a business that shall continue for an indefinite period, thus even an intention to carry business for a long time can be termed as PE, but this does not means that right on land should be for perpetuity. Certain countries define the indefinite period term to be of 6 months in order to establish a …show more content…
a planning office is installed. It continues until the work is complete or permanently abandoned. A site should not be regarded as ceasing to exist when work is temporarily discontinued. Seasonal and temporary interruptions should be included in determining the life of a site for example, due to bad weather, shortage of material, labour difficulties. In some projects, due to its nature, contractor's activity has to be relocated continuously or at least from time to time, as the project progresses. For example in construction areas where roads or canals were being constructed, waterways dredged, or pipe-lines
According to UN Model, Article 5 of the same deals with structure of permanent establishment. Article 5 (1) defines a PE and defines a basic …show more content…
According to this test, right to use the place is more evident for establishing a PE rather than the knowledge whether the place is owned, rented or otherwise at the disposal of the enterprise. This implies place for carrying out the business should be available to the enterprise without any hindrance, and for establishing the place as PE there has to be sufficient legal right. For example if a lawyer enters the agreement to handle some assessment of the client from the premises of the client, this would amount to be giving of legal right and the premises from which assessment is carried on , can be termed as PE.
The other criterion for subjective test is that the place of business should have certain degree of permanence; and therefore a place temporary in nature cannot be said as a PE. Permanence means a business that shall continue for an indefinite period, thus even an intention to carry business for a long time can be termed as PE, but this does not means that right on land should be for perpetuity. Certain countries define the indefinite period term to be of 6 months in order to establish a …show more content…
a planning office is installed. It continues until the work is complete or permanently abandoned. A site should not be regarded as ceasing to exist when work is temporarily discontinued. Seasonal and temporary interruptions should be included in determining the life of a site for example, due to bad weather, shortage of material, labour difficulties. In some projects, due to its nature, contractor's activity has to be relocated continuously or at least from time to time, as the project progresses. For example in construction areas where roads or canals were being constructed, waterways dredged, or pipe-lines