Post by Rahul R Jain

Delhi HC: Vacation & non-billable days do not count toward service PE threshold The Delhi High Court in Commissioner of Income-tax (International Taxation) v. Clifford Chance Pte Ltd ([2025] 181 taxmann.com 254) has delivered a significant ruling on the scope of Service Permanent Establishment (PE) under Article 5(6) of the India-Singapore DTAA. Facts: Clifford Chance, a Singapore based legal advisory firm, provided services to Indian clients through two employees partly by visiting India (120 days in total) and partly from overseas. The Revenue alleged both a service PE and a virtual service PE, seeking to tax receipts of ₹15.55 crore (AY 2020–21) and ₹7.97 crore (AY 2021–22). Held: - On physical presence : Only 44 days of actual service delivery in India (excluding vacation, business development, and common days) count toward the 90-day threshold. - Virtual PE rejected: The DTAA does not contemplate a “virtual service PE”; courts cannot read in concepts absent from treaty language. Interpretation must remain strict and text-based, despite global trends and OECD commentary.