By way of a recent decision,^[1] the Supreme Court of India (‘SC’) has dismissed the appeals filed by Hyatt International Southwest Asia Ltd (‘Appellant’), challenging the findings of the Delhi High Court’s (‘Delhi HC’) decision with respect to the issue of existence of a Permanent Establishment (‘PE’).

The civil appeals, which were filed against the judgement of the division bench of Delhi HC,^[2] raised the question as to whether the provision of hotel consultancy and advisory services by the Appellant (a non-resident based in UAE) to Asian Hotels Limited in India (‘Asian Hotels’), resulted in the Appellant having a fixed place PE in India.^[3] This determination involved a thorough analysis of the arrangement between the Appellant and Asian Hotels as per the strategic oversight services agreements (collectively, ‘SOSA’) and the hotel operating services agreement. Basis the terms of the SOSA, the SC observed that the Appellant’s role was not confined to high-level decision making but rather extended to substantive operational control and implementation. What seems to have weighed with the SC is the Appellant’s ability to enforce compliance, oversee operations and derive profit-linked fees from Asian Hotels, which as per the SC was sufficient to demonstrate a ‘clear and continuous commercial nexus and control with the hotel’s core functions’. As per the SC, this nexus was sufficient to satisfy the necessary conditions for constitution of a fixed place PE in terms of the India-UAE Double Taxation Avoidance Agreement.

Another important fact which seems to have weighed with the SC is the regular visits of the Appellant’s employees to oversee the operations of Asian Hotels and implement the SOSA. While noting that no single individual exceeded the nine-month stay threshold, it was held that continuity of business presence in aggregate is crucial for determining the said period and not the length of stay of each individual employee. The decision of the SC draws extensively from its earlier decision in Formula One World Championship Limited v. CIT ^[4] and reaffirms the primacy of the ‘disposal test’ in construing a fixed place PE.

Interestingly, the SC also provides a reference to the Delhi HC full bench decision^[5] on the aspect of attribution of profits. Although the question of attribution was not an issue in the instant civil appeals, the SC reproduced an extract from the said decision and observed that ‘income’ received under the SOSA was attributable to such PE.

[1] Hyatt International Southwest Asia Ltd. v. ADIT (2025) INSC 891 (SC).

[2] Hyatt International-Southwest Asia Ltd. v. ADIT (2024) 158 taxmann.com 136 (DB) (Delhi HC).

[3] Article 5(1), India-UAE Double Taxation Avoidance Agreement.

[4] Formula One World Championship Limited v. CIT (2017) 15 SCC 602 (Supreme Court).

[5] Hyatt International Southwest Asia Ltd. v. ADIT (2024) 166 taxmann.com 466 (Full Bench) (Delhi HC).