Permanent establishment attributed 50:50 share of M&A advisory profits for Hong Kong non-resident with Mumbai branch

5-Second Takeaway

The tribunal treated the assessee’s Mumbai branch as giving rise to a business connection and attributed profits from successful M&A deals on the group’s 50:50 origination-and-execution model. Where a branch was wholly responsible for either function, it received the full 50% share allocated to that function; otherwise, the revenue was split according to the branch’s role.

The assessee was a Hong Kong company with a Mumbai branch, engaged in cross-border mergers and acquisitions advisory work, capital raising, and financial restructuring. Its business model divided each successful deal into two integrated functions, origination and execution, and the resulting revenue was allocated between those functions on a 50:50 basis.

The dispute concerned how profits should be attributed where Indian operations formed part of that process. The tribunal accepted that the assessee’s branch presence in India constituted a relevant business connection for the income generated from successful transactions.

It then applied the assessee’s own internal allocation method to determine attributable profits. If a particular branch was entirely responsible for either origination or execution, it was credited with the full 50% assigned to that function.

Where responsibility was shared, the attributed revenue was divided between the relevant branches according to the role each played. The result was an attribution exercise tied to the commercial structure the assessee used for its advisory business.