Post by Prateek Pareek

The "Within" Distinction. In the recent Delhi High Court's decision in the case of Clifford Chance, Hon'ble HC stated that use of the word "Within" in Article 5(6) of India Singapore DTAA means that Clifford Chance had to have employees physically present in India in order to constitute a Service PE. This interpretation effectively rejects the notion of a "Virtual Service PE" where services are rendered remotely from outside India, even if they benefit Indian clients or projects. The decision differs from the Bangalore Tribunal's decision in the case of ABB FZ- LLC, where the Tribunal held that services being rendered without physical presence (on account of technology), can establish Service PE (India-UAE DTAA does not contain the term "Within a contracting state", only "In the other contracting state"). While the HC has not ruled on the drafting differences, it has laid down the guidance that DTAAs need to be interpreted strictly and it will be prudent for the tax function to pay heed