Columbia Sportswear - Karnataka High Court finds that quality assurance work in a purchasing office in India did not give rise to a permanent establishment there

A U.S.-resident outdoor apparel company did not sell or distribute its products in India, but established a liaison office there to purchase, for export, apparel from local manufacturers. The U.S.-India Treaty had the standard exclusion from the definition of “permanent establishment” for

the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise.

The Indian tax authority latched onto the word "solely." However, the Karnataka High Court found that activities of the liaison office in doing more than bare-bones purchasing agent work, such as detailed quality assurance work on the manufacturer's products and acting as a go-between between them and the U.S. head office, did not detract from its coming within this exception.

Neal Armstrong. Summary of Columbia Sportswear Co. v. Director of Income Tax (2015), W.P. No. 39548/2012 (T-IT) under Treaties – Art. 5.