It has been reported that the Advance Ruling Authority of India has held in ?Golf in Dubai LLC? that isolated temporary activities of a non-resident in India without any regularity of continuity do not constitute a permanent establishment in India. Hence the business profits from the activities in India are not liable to tax in India.
The facts were as follows: the company Golf in Dubai LLC is registered in United Arab Emirates and promotes golf in various countries. Golf in India LLC organized inter alia two tournaments in India (in Bangalore and Delhi). The LLC had to pay fees for using the premises of the golf clubs, and received sponsorship income from various sponsors. It concluded also a formal agreement to hold tournaments from 2007 to 2010. Golf in Dubai LLC received no ticket income, but only sponsorship fees, management fees for organizing the tournaments and income from the sale of merchandise at the venues and over the internet.
The Advance Ruling Authority had to deal with two issues:
– did Golf in India LLC maintain a permanent establishment in India under the tax treaty concluded between India and the United Arab Emirates; and
– were the clubs at whose venues the tournaments were held constituted agency p.e.?s under the same treaty.
The Advance Ruling Authority decided that Golf in Dubai LLC had neither a fixed place p.e. nor an agency p.e. Regarding the absence of an agency p.e. the Authority stipulated that nothing on record showed that any party in India had any authority to conclude contracts on behalf of Golf in Dubai LLC. Regarding the fixed place p.e. the Authority held that although the golf course venue could be considered as places of business the lacking elements were regularity and continuity.