What do the 1989 India–US Exchange of Notes require before 'securing orders' creates a PE?

Question

Accepted Answer

On the facts stated, the Indian entity is a dependent agent habitually securing orders wholly or almost wholly for its US parent — but under Article 5(4)(c), read with the Exchange of Notes (12 Sep 1989), securing orders alone does not create a permanent establishment. The matter turns on three unresolved facts: whether the Indian team itself accepts orders; whether buyers are told its acceptance binds the parent; and whether the parent's own conduct has fostered that belief. If each is made out, the limb is engaged and the realistic defence shifts from existence to attribution (Morgan Stanley); until then it is open, not established.

fact	as stated
agentType	dependent
concludesContracts	secures
agentExclusivity	yes

ADIT v. E-Funds IT Solution Inc, (2018) 13 SCC 294 (SC, 24.10.2017)	with no case that the Indian entity was authorised to or exercised authority to conclude contracts, and no factual foundation for any Article 5(4) clause, the agency limb fails at the threshold
DIT v. Morgan Stanley & Co Inc, (2007) 292 ITR 416 (SC)	a captive performing support functions without authority to conclude contracts is not a dependent-agent PE
Progress Rail Locomotive Inc v. Dy CIT (IT), (2024) 466 ITR 76 (Delhi HC, 28.05.2024)	limb (c) requires the Indian entity to be engaged or created solely — or concerned primarily — with securing orders for the enterprise, and habitually so; a finding to that effect is a precondition

What do the 1989 India–US Exchange of Notes require before 'securing orders' creates a PE?

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