DTAA: business profits of non-resident taxable in source state only if:
AA Permanent Establishment exists (per relevant Section)
BAny local sales occur (per relevant Section)
CBank account exists
DDirector is local
Answer & Solution
Correct answer: A. A Permanent Establishment exists (per relevant Section)
1. OECD Model Article 7: business profits taxable only in residence state unless PE in other state.
2. PE (Article 5): fixed place, dependent agent, service PE (some treaties).
3. India also adopts UN model in some treaties; added EL/SEP for digital.
_Source: ICAI BoS CA Final Paper 7, Ch 24 "Transfer Pricing"_
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