Supreme Court Holds Foreign Entity Liable to Tax for Operating via Temporary Premises in India

The Supreme Court has held that a foreign company operating in India through temporary premises is liable to pay income tax.

The decision was made while dismissing Hyatt International’s appeal, which argued that it had no “permanent establishment” (PE) in India and was therefore exempt from tax.

The Court held that Hyatt’s business activities through an Indian hotel, even without owning property, constituted a “fixed place PE” under tax treaties.

The judgment clarified that business control and operational presence, not just ownership, determine tax liability for foreign companies in India. (Hyatt International Southwest Asia Ltd. Vs Additional Director of Income Tax)