Tax Treaty Case Law around the Globe 2015

S. 353India: Is a Competent Authority Determination on the Existence of a PE in the Source State Determinative? – The Case of eFunds Inc

D.P. Sengupta

I. S. 354Introduction

The mutual agreement procedure (MAP) is one of the principal modes of resolution of disputes between taxpayers and tax administrations. It is a very flexible process and because of such flexibility, and the absence of any strict rules and procedure, MAP resolutions need not be in any particular format. The principal aim of the Competent Authorities (CA) is to ensure that there is no double taxation. With that aim in view, resolutions are reached after considering the particular positions of the two contracting states. It may so happen that the two sides have different entrenched positions on particular issues. Under such circumstances if the parties concerned do not belong to any homogeneous block bound by some common rule of interpretation, one side may concede a point for the purpose of avoiding double taxation. Competent Authorities obviously have to labour hard to arrive at a consensus. In India, MAP has been held to be separate from the normal dispute resolution process available under the domestic law. Taxpayers are allo...