Hyatt – Supreme Court of India finds that a Hyatt UAE company providing hotel supervisory services had a PE in India

The taxpayer, a corporation resident in the United Arab Emirates, entered into a consultancy agreement (the “SOSA”) with an Indian company in respect of two hotels situated in Delhi and Mumbai pursuant to which it agreed over the term of 20 years to provide strategic planning services and know-how to ensure that the hotels were developed and operated as efficient and high-quality international full-service hotels.

In finding that the hotels constituted fixed permanent establishments (PEs) in India within the meaning of Art. 5(1) of the UAE-India DTAA, so that income received by the taxpayer under the SOSA was attributable to such PEs and taxable in India, R. Mahadevan J stated:

Formula One … expressly held that exclusive possession is not essential – temporary or shared use of space is sufficient, provided business is carried on through that space. …

[T]he functions performed by the appellant, through its staff operating from the hotel premises … clearly establishing their control over the day to-day operations of the hotel.

Art. 5(2)(i) of the DTAA provided:

2. The term "permanent establishment" includes especially: …

(i) the furnishing of services including consultancy services by an enterprise of a Contracting State through employees or other personnel in the other Contracting State, provided that such activities continue for the same project or connected project for a period or periods aggregating more than 9 months within any twelve-month period.

R. Mahadevan J went on to state:

[T]he appellant’s executives and employees made frequent and regular visits to India to oversee operations and implement the SOSA. … Under Article 5(2)(i) of the DTAA, the relevant consideration is the continuity of business presence in aggregate – not the length of stay of each individual employee.

In other words, the hotel was regarded as a “project.”

Neal Armstrong. Summary of Hyatt International Southwest Asia Ltd. v. Additional Director of Income-Tax, Civ. App. No. 9766 of 2025 under Treaties – Income Tax Conventions – Art. 5.