Formula One - Supreme Court of India finds that a UK company with operational control over annually-recurring 3-day Grand Prix races in India had a PE (the racing circuit of a local company)

A UK corporation ("FOWC"), which held the worldwide rights to commercially exploit the Formula One World (car-racing) Championships, agreed with an Indian corporation (“Jaypee”) that, in consideration of US$40 million payable by Jaypee, Jaypee would host, stage and promote the Formula One Grand Prix event at a racing circuit in India to be constructed by it. This agreement had a term of five years (renewable for another five years) and gave FOWC access to the circuit for a period of up to six weeks leading up to and encompassing each annual (three-day) F-1 Championship event. Jaypee immediately gave back media and title sponsorship rights to three FOWC affiliates, which generated revenue therefrom.

Sikri J found that the circuit was “a fixed place of business through which the business of [FOWC] is wholly or partly carried on” and, thus, was a permanent establishment of FOWC under Art. 5 of the U.K.-India Treaty. Respecting whether the circuit was a fixed place of business of FOWC, he did not appear to attach much significance to the assignment by FOWC to its affiliates of various rights, stating:

… The … arrangement clearly demonstrates that the entire event is taken over and controlled by FOWC and its affiliates. There cannot be any race without participating/competing teams, a circuit and a paddock. All these are controlled by FOWC and its affiliates.

Respecting whether the circuit was “permanent” notwithstanding the three-day duration of the annual races, he stated (adopting, as indicated, reasons below):

[B]oth the exclusive nature of the access and the [up to 6-week] period for which it is accessed…makes the presence of a kind contemplated under Article 5(1), i.e. it is fixed. …

[T]he OECD commentary and Klaus Vogel's commentary…[state] that as long as the presence is in a physically defined geographical area, permanence in such fixed place could be relative having regard to the nature of the business….

A stand at a trade fair, occupied regularly for three weeks a year, through which an enterprise obtained contracts for a significant part of its annual sales, was held [in Fowler] to constitute a PE.

Neal Armstrong. Summary of Formula One World Championship Ltd v. Commissioner of Income Tax, International Taxation – 3, Delhi & Anr., Civil Appeal No. 3849 of 2017 under Treaties - Article 5.