In Hyatt International Southwest Asia Ltd v ADIT, the Supreme Court held that a Dubai company had a fixed-place permanent establishment (PE) in India under Article 5(1) of the India–UAE tax treaty, although it had no exclusive or designated space in the Indian hotels it oversaw. The Court rested the finding on “pervasive and enforceable control” under a 20-year contract and called the test “a fact-specific inquiry”. A group testing its own position against the ruling should read it as a decision on those facts: we have not identified a later reported judgment applying Hyatt to a comparable UAE management arrangement (searched to 29 October 2026).

Table of Contents

Citation

Hyatt International Southwest Asia Ltd v Additional Director of Income Tax, 2025 INSC 891, Civil Appeal No. 9766 of 2025 (arising out of SLP (C) No. 5710 of 2024), with Civil Appeals 9767–9773 of 2025. Supreme Court of India, decided 24 July 2025. Bench: J.B. Pardiwala and R. Mahadevan JJ; judgment by Mahadevan J. The appeals covered assessment years 2009-10 to 2017-18, other than 2015-16, under the Income-tax Act 1961 (para 2).

Facts

The appellant was incorporated in the Dubai International Financial Centre and was a UAE tax resident under Article 4 (para 3.1). That was not in dispute (para 8). On 4 September 2008 it signed two Strategic Oversight Services Agreements (SOSAs) with Asian Hotels Limited, the owner of hotels in Delhi and Mumbai (para 3.2). The appellant said day-to-day operations were run by Hyatt India Pvt Ltd under a separate agreement with the owner (para 4.4). Each SOSA ran for 20 years, extendable by 10 (para 12.1). Fees were a percentage of room and other revenue and of cumulative gross operating profit (para 12.3).

The Assessing Officer found a business connection, a PE and royalties (para 3.4). The Tribunal upheld a fixed-place PE, relying on Formula One (para 3.6). On 22 December 2023 the Delhi High Court answered the royalty question for the taxpayer, held that there was a fixed-place PE, and referred the question of losses to a Larger Bench (paras 3.9–3.10).

Issue

Whether the appellant had a PE in India under Article 5(1) and, consequently, whether its SOSA income was taxable in India (para 10).

Holding: the Hyatt permanent establishment ruling of the Supreme Court

Yes. The Court affirmed that the appellant “has a fixed place PE in India within the meaning of Article 5(1) of the DTAA”, and that the SOSA income “is attributable to such PE and is therefore taxable in India” (para 24). The appeals were dismissed (para 25).

Reasoning

The test (paras 13, 15). Following Formula One, the place must be “at the disposal” of the enterprise and its business must be carried on through it (para 13). There is “no strait-jacket formula”. Trading usually needs a continuously used place; a service business may not. The inquiry is “fact-specific” and covers the right of disposal, “the degree of control and supervision exercised”, and “ownership, management, or operational authority” (para 15).
Control (paras 12.4, 16). The SOSA gave “a continuing and enforceable right to implement its policies” (para 12.4) and “pervasive and enforceable control over the hotel’s strategic, operational, and financial dimensions”: appointing the general manager, setting HR and procurement policy, pricing and branding, managing operational bank accounts, and assigning staff without the owner’s consent (para 16).
Space (paras 17–18). The “absence of an exclusive or designated physical space” did not matter. Temporary or shared use suffices where business is carried on through the space. The functions were core, not auxiliary, and ran for twenty years with revenue sharing (para 17). No formal right of use was needed; the question was whether the premises were “in substance” at the enterprise’s disposal (para 18).
Form and substance (para 19). A separate Indian company running daily operations did not “decisively support” the appellant: “legal form does not override economic substance in determining PE status”.
E-Funds distinguished (para 20). There, the Indian subsidiary “merely provided back-office support” at arm’s length. Here the hotel was “the situs of the appellant’s primary business operations”.
Visits (para 21). No individual exceeded nine months, but under Article 5(2)(i) “the relevant consideration is the continuity of business presence in aggregate”.
Conclusion (para 22). The role “was not confined to high-level decision making, but extended to substantive operational control and implementation”, with profit-linked fees.
Losses (para 23). The Court noted the Larger Bench’s answer that “profit attribution to a PE in India is permissible even if the overall foreign enterprise has incurred losses”.

What the Court did not decide

Royalty. The High Court decided it for the taxpayer. The appeals before the Court were the taxpayer’s, against the PE finding, and the judgment does not deal with royalty (paras 3.10, 9).
Service PE. The holding is under Article 5(1) (paras 22, 24). Para 21 uses Article 5(2)(i) to say that presence is judged in aggregate. It does not hold that a service PE arose, and the treaty’s nine-month text is unchanged. The finding was a fixed-place PE; para 21’s reference to aggregate presence does not settle a general rule for aggregating visits, or how the nine-month period under Article 5(2)(i) is computed.
The amount attributable. The Court affirmed that the SOSA income is attributable to the PE (para 24). It did not discuss how that profit is computed under Article 7(2)–(3). Holding that income is attributable to the PE does not decide the net profit taxable under Article 7, which the judgment did not determine.
Residence, agents and place of management. UAE residence was accepted (para 8). The Court did not analyse Article 5(4) (dependent agents) or Article 5(2)(a) (“a place of management”).
Penalty. An interim order stayed penalty proceedings (paras 7–7.1). The judgment says nothing further on penalty.

How the 2025 tribunals have read it

We found four orders that apply Hyatt. All concern aircraft lessors under the India–Ireland treaty, and none found a PE:

Sunflower Aircraft Leasing (ITAT Mumbai, ITA 1107/Mum/2025, 13 August 2025) summarised Hyatt in seven points. It held that the aircraft were at the lessee’s disposal, not the lessor’s, citing Hyatt for the proposition that “a foreign enterprise’s business must actually be conducted through the alleged PE” (paras 30–33).
Sky High Appeal XLIII / TFDAC Ireland II (ITAT Mumbai, same bench and date) reproduced those findings (para 105).
Kosi Aviation Leasing (ITAT Delhi, ITA 994/Del/2025, 30 September 2025) extracted them and followed them (paras 50–51).
Sky High LXXIX and others (ITAT Mumbai, ITA 1546–1550/Mum/2025, 6 October 2025) summarised the same findings, including the Hyatt principles, and followed them (paras 7, 9).

We read Sunflower and Sky High LXXIX in unofficial reproductions (Indian Kanoon), not the official ITAT orders, and checked the quoted paragraphs against those copies.

The tribunals have therefore used Hyatt’s disposal test to reject a PE on lessor facts, just as the Court used it to find one on the hotel facts. Two cautions apply. First, their summary is the tribunal’s paraphrase, and it cites the appeal as “Civil Appeal No. 9766 of 2015”; the judgment is Civil Appeal No. 9766 of 2025. Second, the summary says the Court “unequivocally held” that PE profits are taxable irrespective of global losses. In the judgment, that proposition is the Larger Bench’s answer, which the Court notes (para 23) before affirming attribution of the SOSA income (para 24).

We have not identified a later reported judgment applying Hyatt to a comparable UAE management arrangement (searched to 29 October 2026).

Open questions

Whether a foreign parent’s shareholder-level control of an Indian subsidiary, without a contract like the SOSA, can put the subsidiary’s premises at the parent’s disposal. The Court distinguished E-Funds on its facts rather than doubting it (para 20).
Whether para 21’s “in aggregate” language will be used to count days under Article 5(2)(i) in a service-PE case.
How profit is attributed to a PE whose income is a fee linked to revenue and gross operating profit.
How the ruling sits with “a place of management” (Art 5(2)(a)) and with Indian residence by place of effective management, for a Dubai company managed partly from India. The practical side of that question is covered in running an India business from Dubai.

For the treaty as a whole, see the India–UAE tax treaty guide; for service PE and agents, the PE and employer-of-record insight.

Common questions

What did the Supreme Court decide in Hyatt? That the Dubai company had a fixed place PE in India under Article 5(1) of the India–UAE treaty, and that its SOSA income was attributable to that PE (para 24).

Does a foreign company need its own office for a fixed place PE after Hyatt? No. The “absence of an exclusive or designated physical space” did not prevent a PE where business was carried on through the hotel premises (para 17).

Is Hyatt a service PE decision? No. The holding is under Article 5(1). Para 21 uses Article 5(2)(i) only to say that presence is judged in aggregate.

Has Hyatt been applied to a UAE group since? We have not identified a later reported judgment applying Hyatt to a comparable UAE management arrangement (searched to 29 October 2026). The 2025 tribunal orders that apply it concern aircraft lessors and found no PE.

Sources

Hyatt International Southwest Asia Ltd v Additional Director of Income Tax, 2025 INSC 891, Civil Appeal No. 9766 of 2025 with Civil Appeals 9767–9773 of 2025, 24 July 2025. Supreme Court of India. sci.gov.in
Agreement between India and the UAE for the avoidance of double taxation (signed 29 April 1992), consolidated text including the 2007 Protocol (S.O. 2001(E), 28 November 2007), Arts 4, 5, 7. Income Tax Department. incometaxindia.gov.in
Sunflower Aircraft Leasing Ltd v ACIT, ITA 1107/Mum/2025, ITAT Mumbai ‘I’ Bench, 13 August 2025. Income Tax Appellate Tribunal. itat.gov.in (unofficial reproduction read at Indian Kanoon; quoted paragraphs checked against that copy; official ITAT copy not obtained)
Sky High Appeal XLIII Leasing Company Ltd / TFDAC Ireland II, ITA 1122/Mum/2025 and 1198/Mum/2025 and others, ITAT Mumbai ‘I’ Bench, 13 August 2025. Income Tax Appellate Tribunal. itat.gov.in
Kosi Aviation Leasing Ltd and others, ITA 994/Del/2025 and others, ITAT Delhi ‘D’ Bench, 30 September 2025. Income Tax Appellate Tribunal. itat.gov.in
Sky High LXXIX Leasing Co Ltd and others v ACIT, ITA 1546–1550/Mum/2025, ITAT Mumbai ‘I’ Bench, 6 October 2025. Income Tax Appellate Tribunal. itat.gov.in (unofficial reproduction read at Indian Kanoon; cited paragraphs checked against that copy; official ITAT copy not obtained)

Hyatt Permanent Establishment: Supreme Court Case Note