Concept of Residency and Place of Effective Management (PoEM)

Table of Content

1. Introduction

2. Residency

2.1 Concept of residency and DTAAs

2.2 Test of Residency

2.3 Forced to stay to be excluded

2.4 Test of de facto control

3. Place of Effective Management

3.1 Certain rulings prior to insertion of PoEM

3.2 PoEM Guidelines

3.3 Test of passive income and presence

3.4 Examples of PoEM

3.5 Determination of PoEM

3.6 PoEM in DTAA

3.7 Transparent entity and entities not recognised in another State

3.8 Ruling based on PoEM in treaties

Checkout Taxmann's Cross-Border Transactions under Tax Laws & FEMA which provides an easy-to-understand commentary on cross-border transactions with respect to Income Tax, GST, Customs, FEMA, etc. It also provides practical guidance based on judicial interpretation of the law and rules.

1. Introduction

The core issue with respect to taxation in cross border transaction is that the laws of two or more countries would apply on the transaction. The concepts of permanent establishment (PE) and transfer pricing pertain largely to the income from business or profession. In certain DTAAs, the income from independent personal services rendered by individuals through a permanent establishment is taxed in terms of a separate Article. However, many types of income can arise in the course of cross border transaction – for instance, payment of interest, dividend, royalty, rent and so on. In this article, a brief overview of various issues relating to these types of income and the treatment under DTAAs are provided. Each DTAA is unique and it is difficult to lay down generalised propositions. But, both from the standpoint of income and the payer (resident or non-resident) the understanding is essential to comply with obligations to withhold tax in India and also to assess tax impact on income earned.

We will examine the issues following the general structure of DTAAs for ease of understanding. Taxation of income from, banking business, shipping and operation of aircrafts which are subject to special provisions and restricted to those entities are not discussed.

2. Residency

2.1 Concept of residency and DTAAs

India taxes incomes which have a source in India and in case of resident, any receipt even if source is outside India, would be taxable. Section 4 of the Income-tax Act, 1961 (‘IT Act’) is the charging section and Section 5 deals with scope of total income. The income which is subject to tax is divided into three categories.

As per Section 5, the total income of any previous year of a person who is a resident includes all income from whatever source derived is taxable if it:

(a) is received or is deemed to be received in India in such year by or on behalf of such person.

(b) accrues or arises or is deemed to accrue or arise to him in India during such year.

(c) accrues or arises to him outside India during such year.

In the case of a person not ordinarily resident in India within the meaning of sub-section (6) of Section 6, the income which accrues or arises to him outside India shall not be so included unless it is derived from a business controlled in or a profession set up in India.

In the case of a non-resident, the following incomes are taxable:

(a) Income which is received or is deemed to be received in India in such year by or on behalf of such person, or

(b) Income accrues or arises or is deemed to accrue or arise to him in India during such year.

2.2 Test of Residency

Section 6 lays down the following conditions, on the satisfaction of which an individual, firm, company may become residents.

(a) Test of residency for individual

An individual is said to be resident in India in any previous year, if he is in India in that year for a period or periods amounting in all to 182 days or more or having within the four years preceding that year been in India for a period or periods amounting in all to 365 days or more, is in India for a period or periods amounting in all to sixty days or more in that year.

In the case of person leaving India for purposes of employment or as crew member of an Indian ship, ‘sixty’ days in the second condition is to be read as 182 days.

In case of citizen or person of Indian origin coming on a visit to India, the period of sixty days was to be read as 182 days. By Finance Act, 2020, clause (c ) pertaining to persons coming on a visit to India has been amended with effect from 1-4-2021 such that 60 days would be read as 120 days in the previous year if the citizen or person of Indian origin has total income other than income from foreign sources exceeding INR 15 lakhs during the previous year.

As per the amendments made by Finance Act, 2020, if the citizen or person of Indian origin has total income other than income from foreign sources exceeding INR 15 lakhs during the previous year and he is not liable to tax in any other country or domicile by reason of residency, or domicile or other similar criteria shall be deemed to be resident of India in that previous year. Income from foreign sources means income which accrues or arises outside India except income derived from a business controlled in or profession set up in India.

An individual would be treated as Resident Not Ordinarily Resident (RNOR) if he has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less.

As per amendments made by Finance Act, 2020 a new sub-clause (c) has been inserted in terms of which a person citizen or person of Indian origin has total income other than income from foreign sources exceeding INR 15 lakhs during the previous year, has been in India for a period of 120 days or more but less than 182 days would also be RNOR. A person deemed as resident under Clause (1A) would also be RNOR.

2.3 Forced stay to be excluded

The High Court of Delhi in CIT v. Suresh Nanda¹ affirmed the ruling in Suresh Nanda v. Assistant Commissioner of Income-tax, Central Circle-13, New Delhi² that where the assessee was forced to stay in India against his will due to impounding of passport, the period of forced stay cannot be counted for determining residential status.

(b) Test of residency for HUF, Firm, Association of Persons (AOP)

A Hindu undivided family, firm or other association of persons is said to be resident in India in any previous year in every case except where during that year the control and management of its affairs is situated wholly outside India.

RNOR – A Hindu undivided family whose manager has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less.

2.4 Test of de facto control

Where all partners of a firm were residing in India and they appointed a power of attorney in Ceylon (now Sri Lanka) who was entirely in charge of the business and the partners did not play any role in control and management, it was held that the firm was not tax resident in India. The High Court of Madras in CIT v. PL. M. TT. Firm³ held that as per the terms of the deed de jure control remained with the principal but de facto control or actual control was with the agent. Thus, rather than mere proof of power or capacity to control and manage, the actual power or control was relevant.

Interpreting the phrase ‘control and management of affairs’ in Saraswati Holding Corpn. Inc v. Dy. DIT(IT)⁴, the ITAT held that control and management of affairs do not mean the control and management of the day-to-day affairs of the business. The fact that discretion to conduct operations of business is given to some person in India would not be sufficient. The words ‘control and management of affairs’ refer to head and brain, which directs the affairs of policy, finance, disposal of profits and such other vital things consisting the general and corporate affairs of the company. Thus, where decisions on investments were taken by directors outside India, the income from investments made in India could not be taxed in the hands of the company only because a few persons had been given authority to conduct the affairs.

(c) Test of residency for company

A company is said to be a resident in India in any previous year, if—

(i) it is an Indian company; or

(ii) its place of effective management, in that year, is in India.

As per Section 2(23A) “foreign company” means a company which is not a domestic company. A domestic company as per Section 2(22A) means an Indian company, or any other company which, in respect of its income liable to tax under the IT Act, has made the prescribed arrangements for the declaration and payment, within India, of the dividends (including dividends on preference shares) payable out of such income. An Indian company as per Section 2(26) means a company formed and registered under the Companies Act, 1956 (now Companies Act, 2013), and includes statutory corporations, any institution, association or body which is declared by the Board to be a company. Thus, companies incorporated in India or declared to be Indian companies for purposes of the IT Act would be resident in India.

3. Place of Effective Management (PoEM)

In other cases, the test would be the Place of Effective Management (PoEM). “Place of effective management” means a place where key management and commercial decisions that are necessary for the conduct of business of an entity as a whole are, in substance made.

The condition of PoEM was introduced in the IT Act by Finance Act 2016 with effect from 1st April, 2017. It replaced the earlier condition of control and management of affairs being wholly situated in India. Initially the condition of PoEM referred to control being situated in India ‘at any time’ during the year. Given that prior to introduction of PoEM it was possible to contend that since the control was not situated wholly in India during that year – for instance if one of the meetings of Board of Directors was outside India, the condition of ‘wholly’ would not be satisfied and the company would be a non-resident, the use of words ‘at any time’ was understandable.

3.1 Certain rulings prior to insertion of PoEM

In Radha Rani Holdings (P.) v. Asstt. DIT⁵ it was held that even if a partial control and management is exercised from outside India, it would not fall within ambit of Section 6(3)(ii) and the company would be treated as a non-resident.

However, the condition of control being in India at any time during the year was criticised as being too wide and hence at the time of enactment, the provision was changed to ‘in that year’. Prior to the insertion of PoEM condition in the domestic Act, the revenue department could not resort to it to determine residency of the individual. The Supreme Court in Union of India v. Azadi Bachao Andolan⁶ opined that:

“The DTAC requires the test of ‘place of effective management’ to be applied only for the purposes of the tie-breaker clause in article 4(3) which could be applied only when it is found that a person other than an individual is a resident both of India and Mauritius. We see no purpose or justification in the DTAC for application of this test in any other situation.”

Presently PoEM is part of the statutory provisions and Circular No.6 of 2017 dated 21-1-2017 and Circular No.25 of 2017 dated 23-10-2017 have been issued by the CBDT in this regard. By Circular No.8 of 2017 dated 23-2-2017, it has been clarified that the PoEM provisions shall not apply to a company having turnover or gross receipts of INR 50 crore or less in a financial year.

3.2 PoEM Guidelines

As per Circular No. 6/2017 (“PoEM guidelines”) the process of determination of POEM would be primarily based on the fact as to whether or not the company is engaged in active business outside India. The PoEM concept is one of substance over form and since “residence” is to be determined for each year, POEM will also be required to be determined on year to year basis. An entity may have more than one place of management, but it can have only one place of effective management at any point of time.

The test of PoEM is based on whether the entity is earning only passive income and its operations are so structured that it is present or active in a country without paying applicable taxes. Thus, a company having key managerial people stationed in India with substantial asset base in India and selling goods through a subsidiary may yet claim that it has no PE in India and being incorporated outside India, it could end up paying very little tax. The concept of PoEM thus examines whether the company is in fact a tax resident of a foreign state with substantial operations outside India or whether the incorporation or having different places of business is only a device to evade tax by being a non-resident.

As per the PoEM guidelines, a company shall be said to be engaged in “active business outside India” if the passive income is not more than 50% of its total income and

(i) less than 50% of its total assets are situated in India; and

(ii) less than 50% of total number of employees are situated in India or are resident in India; and

(iii) the payroll expenses incurred on such employees is less than 50% of its total payroll expenditure.

3.3 Test of passive income and presence

In order to determine whether a company is engaged in active business the average of the data of the previous year and two years prior to that shall be taken into account unless the company has been in existence only for a shorter period. The conditions of having earned passive income of less than 50% and having less than 50% or assets, employees and payroll expenses have to be satisfied cumulatively. Thus, merely because say 95% of the income of a company is from royalty but 90% of its assets are outside India, it need not be scrutinised for PoEM since other conditions are not met. The company would be engaged in active business outside India. The idea is to identify such companies who may be trying to evade taxes by merely having incorporation or a set of directors operating from outside India while in substance it is carrying out activity in India and earning incomes which should be subject to tax in India.

The income and value of depreciable assets would be computed as per the laws in the country of incorporation, or for tax purposes, in case of other asset, value would be as per books of account. The number of employees shall be the average of the number of employees as at the beginning and at the end of the year and shall include persons, who though not employed directly by the company, perform tasks similar to those performed by the employees.

“Passive income” of a company shall be aggregate of:

1. 1. income from the transactions where both the purchase and sale of goods is from/to its associated enterprises; and
   2. income by way of royalty, dividend, capital gains, interest or rental income.

However, any income by way of interest shall not be considered to be passive income in case of a company which is engaged in the business of banking or is a public financial institution, and its activities are regulated as such under the applicable laws of the country of incorporation.

As per PoEM guidelines, the place of effective management in case of a company engaged in active business outside India shall be presumed to be outside India if the majority meetings of the board of directors of the company are held outside India. However, if it is established that the directors of the company are standing aside and not exercising their powers of management and such powers are being exercised by either the holding company or any other person (s) resident in India, then the place of effective management shall be considered to be in India.

Circular No. 25 of 2017 further clarified that so long as the Regional Headquarter operates for subsidiaries/group companies in a region within the general and objective principles of global policy of the group laid down by the parent entity in the field of payroll functions, accounting, HR functions, IT infrastructure and network platforms, supply chain functions, routine banking operational procedures, and not being specific to any entity or group of entities per se; it would, in itself, not constitute a case of BoD of companies standing aside and such activities of Regional Headquarter in India alone will not be a basis for establishment of PoEM for such subsidiaries/group companies.

Thus, to determine PoEM, first the persons who are making the key management decisions are identified and then second stage would be determination of place where these decisions are in fact being made. The guidelines do recognise that place of decision may be a less reliable test given the advent of modern technology. Thus, it has been stated that in such cases the place where the directors or the persons taking the decisions or majority of them usually reside may also be a relevant factor.

3.4 Examples of PoEM

Thus, PoEM could be

(i) The location where the Board meets and takes decisions provided it retains the authority and makes key management and commercial decisions necessary for the conduct of the company’s business as a whole. If it merely ratifies decision, such place would not be PoEM.

(ii) The place where the Executive Committee members are based and where that committee develops and formulates the key strategies and policies for mere formal approval by the full board.

(iii) The location of the head office if company’s senior management and their support staff are based in a single location and that location is held out to the public as the company’s principal place of business or headquarters then that location is the place where head office is located. In case the senior management operates from multiple places then the place from where they are primarily based or normally return from travel would be a relevant factor.

(iv) The place where the person actually having authority to decide is present in case of decisions by circular resolution.

(v) The place where shareholder decides where in fact the shareholder involvement results in effective management. Generally, the decisions made by shareholders on matters which are reserved for shareholders decision under the company laws are not relevant for determination of a company’s place of effective management. This is because such decisions typically affect the existence of the company itself or the rights of the shareholders as such, rather than the conduct of the company’s business from a management or commercial perspective and are therefore, generally not relevant for the determination of a company’s place of effective management.

(vi) The place where day to day, operational decisions are taken would not be PoEM.

The Circular lists two additional factors as secondary factors; namely place where main and substantial activity of the company is carried out or place where the accounting records of the company are kept.

The existence of a PE, or permanent residence of a director in India, etc., are not relevant if they do not meet the test of key decision making.

3.5 Determination of PoEM

The Assessing Officer (AO) shall, before initiating any proceedings for holding a company incorporated outside India, on the basis of its PoEM, as being resident in India, seek prior approval of the Principal Commissioner or the Commissioner. On determining that PoEM is in India, the AO should seek prior approval of the collegium of three members consisting of the Principal Commissioners or the Commissioners, to be constituted by the Principal Chief Commissioner of the region concerned. The collegium so constituted shall provide an opportunity of being heard to the company before issuing any directions in the matter.

Three illustrations mentioned in the Circular are reproduced for better understanding.

Example 1: Company A Co. is a sourcing entity, for an Indian multinational group, incorporated in country X and is 100% subsidiary of Indian company (B Co.). The warehouses and stock in them are the only assets of the company and are located in country X. All the employees of the company are also in country X. The average income wise breakup of the company’s total income for three years is, —

(i) 30% of income is from transaction where purchases are made from parties which are non-associated enterprises and sold to associated enterprises;

(ii) 30% of income is from transaction where purchases are made from associated enterprises and sold to associated enterprises;

(iii) 30% of income is from transaction where purchases are made from associated enterprises and sold to non-associated enterprises; and

(iv) 10% of the income is by way of interest.

Interpretation: In this case passive income is 40% of the total income of the company. The passive income consists of, —

(i) 30% income from the transaction where both purchase and sale is from/to associated enterprises; and

(ii) 10% income from interest.

The A Co. satisfies the first requirement of the test of active business outside India. Since no assets or employees of A Co. are in India the other requirements of the test is also satisfied. Therefore company is engaged in active business outside India.

Example 2: The facts are same as in Example 3 but it is established by the Assessing Officer that although A Co.’s senior management team signs all the contracts, for all the contracts above Rs. 10 lakh the A Co. must submit its recommendation to B Co. and B Co. makes the decision whether or not the contract may be accepted. It is also seen that during the previous year more than 99% of the contracts are above Rs. 10 lakh and over past years also the same trend in respect of value contribution of contracts above Rs. 10 lakh is seen.

Interpretation: These facts suggest that the effective management of the A Co. may have been usurped by the parent company B Co. Therefore, PoEM of A Co. may in such cases be not presumed to be outside India even though A Co. is engaged in active business outside India and majority of board meeting are held outside India.

Example 3: An Indian multinational group has a local holding company A Co. in country X. The A Co. also has 100% downstream subsidiaries B Co. and C Co. in country X and D Co. in country Y. The A Co. has income only by way of dividend and interest from investments made in its subsidiaries. The Place of Effective Management of A Co. is in India and is exercised by ultimate parent company of the group. The subsidiaries B, C and D are engaged in active business outside India. The meetings of Board of Director of B Co., C Co. and D Co. are held in country X and Y respectively.

Interpretation: Merely because the Place of Effective Management of an intermediate holding company is in India the PoEM of its subsidiaries shall not be taken to be in India. Each subsidiary has to be examined separately. As indicated in the facts since companies B Co., C Co. and D Co. are independently engaged in active business outside India and majority of Board meetings of these companies are also held outside India. The PoEM of B Co., C Co. and D Co. shall be presumed to be outside India.

The PoEM is also relevant to determine applicability of Chapter XII-G in respect to income of shipping companies wherein the companies can pay tonnage tax computed as per the provisions of the said Chapter. The PoEM of the qualifying company should be in India and it is defined as the place where the board of directors of the company or its executive directors, as the case may be, make their decisions; or in a case where the board of directors routinely approve the commercial and strategic decisions made by the executive directors or officers of the company, the place where such executive directors or officers of the company perform their functions.

3.6 PoEM in DTAAs

The Circular on PoEM guidelines incorporates various quantitative tests. The concept of PoEM is incorporated in various DTAAs entered into by India. For instance, the India -Norway DTAA in Article 4 (1) states:

“For the purposes of this Agreement, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature.”

And Article 4(3) provides

“Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. If the State in which its place of effective management is situated cannot be determined, then the competent authorities of the Contracting States shall endeavour to settle the question by mutual agreement.”

Usually in case of individuals, permanent home, the habitual abode or centre of vital interests is used as the criteria to determine residency. However, in case of companies and other entities usually the place where it is registered, under the laws of a particular State may be taken as the domicile. However, by virtue of its operations, it may meet the test of residency in another State also. In order to avoid double taxation, treaties usually incorporate the so called ‘tie-breaker’ rule to determine residency of the individual. The determination of residency is important both from point of view of applicability of the tax law of a State as well as for eligibility to treaty benefits.

Article 1 of a DTAA lays down the personal scope i.e. who will be covered by the agreement. Generally, Article 1 provides that the Convention shall apply to persons who are (tax) residents of one or both of the Contracting States.

“This Agreement shall apply to persons who are residents of one or both of the Contracting States.” (Article 1 of Indo Canada Treaty)

If the person is a tax resident of one of the contracting States, then he can claim benefit under the treaty. In ING Bewaar Maatschappij I BV v. Dy. CIT⁷ the revenue department sought to deny benefit of the India-Netherlands DTAA to the assessee which was a fund (Sub-account) which was managing the investment of trust based in Netherlands. The beneficiaries of the trust paid tax on the income earned by the trust in Netherlands. The revenue department while assessing the income in the hands of the representative assessee (trustee), contended that since the fund was a transparent entity it could not qualify as a resident for purposes of the DTAA and the income was taxable in India. The ITAT held that residency had to be tested qua the beneficiaries who were tax residents and hence treaty protection would be available.

3.7  Transparent entity and entities not recognised in another State

An issue can arise in case of fiscally transparent entities and those which may be peculiar to a State. For instance, a Hindu Undivided Family (HUF) or Association of Persons (AoP) which is recognised in India as a tax resident but not in other countries.

The tax residency is determined in terms of the tax laws of State. Thus, an entity that is not recognised as resident for tax purposes – say a partnership firm in UK, earning income from India would be taxed in India, however, since the income is not taxed in the hands of the firm but in the hands of the partners in UK, may not be able to claim benefit of the DTAA, since it would not be a resident of either State. The issue of fiscally transparent entities suffering from economic double taxation that is – same income getting taxed twice though the DTAA provides relief from juridical double taxation that is – same entity (resident) getting taxed in two jurisdictions was examined by ITAT, Mumbai in Linklaters LLP v. ITO⁸. The assessee was a partnership firm in UK and the revenue department contended that it cannot avail benefit of the DTAA since it was a fiscally transparent entity in UK- the firm is not taxed, only partners are taxed.

It opined that the term “liable to tax” need not be understood to indicate fiscal domicile

“The term ‘liable to tax by reasons of his domicile, residence, place of management or any other criterion of similar nature’. There could be several reasons for which a person may be liable to tax in a tax jurisdiction, such as source based taxation of an income, a presumptive tax in respect of an offshore business, or simply a tax because of a physical presence, such as by way of a liaison office, in a tax jurisdiction, or because of a locality related attachment which leads to residence based taxation. The taxation of a person in all these situations does not necessarily indicate a fiscal domicile in that jurisdiction. In our considered view, in its contextual sense, expression ‘liable to tax by reasons of his domicile, residence, place of management or any other criterion of similar nature’ refers to a situation in which a person is liable to tax in a tax jurisdiction by the virtue of a locality related attachment which leads to residence type taxation.”

Relying on the Latin legal maxim that ‘A rubro ad nigrum’ which means, literally, from red to the black, originating from olden times where the title of a statute as well as headings of a provision in the statute, were written in red while its body text was written in black, the ITAT held that the purpose of Article 4 is ascertainment of fiscal domicile of a person, and a fiscal domicile is a factual aspect which cannot oscillate due to peripheral variations in the scheme of tax laws of that jurisdiction. Also, India’s position has been and is⁹ that partnerships must be considered as residents of their respective countries in view of their legal and tax characteristics. Thus, it was held that the partnership qualified as a resident and would be eligible for treaty benefit.

Article 3 of the MLI on Transparent Entities states that for the purposes of a Covered Tax Agreement, income derived by or through an entity or arrangement that is treated as wholly or partly fiscally transparent under the tax law of either Contracting Jurisdiction shall be considered to be income of a resident of a Contracting Jurisdiction but only to the extent that the income is treated, for purposes of taxation by that Contracting Jurisdiction, as the income of a resident of that Contracting Jurisdiction. Thus some relief is provided to such entities against the effect of asymmetric taxation.

3.8 Ruling based on PoEM in treaties

The situs of the Board of Directors which exercises control and perform management functions that is the relevant consideration to determine PoEM. In Nimbus Sport International Pte. Ltd. v. Dy. DIT¹⁰  it was held that the appellant is a resident of Singapore under Article 4 of the DTAA because it is a resident under the domestic law of Singapore and “its place of effective management” is located at Singapore. While the issue of residency was examined using the test of control and management of affairs in the domestic law, considering the decision-making activities and location of meeting, it was held that assessee company’s control and management was located wholly outside India.

The case of ITO v. Martrade Gulf Logistics FZCO-UAE¹¹  revolved around the issue of eligibility for treaty benefit with the assessee claiming the same under India-UAE DTAA but revenue department denying the same contended that the PoEM was not in UAE but in Germany. Factually, though shareholders were non-UAE residents, the assessee by reason of incorporation was a resident of UAE. The AO held that the place of effective management, the directors and some board meetings were held outside UAE and hence merely by incorporating the entity in UAE, the assessee was not entitled to treaty benefit. However, the CIT(A) granted relief to the assessee reasoning that nationality of the director, place of holding of AGM and residential status of shareholders are not relevant factor for determining residential status of the company.

The AO had invoked the Limitation of Benefits (LoB) clause (Article 29 of India -UAE DTAA) which states that an entity which is a resident of a Contracting State shall not be entitled to the benefits of this Agreement if the main purpose or one of the main purposes of the creation of such entity was to obtain the benefits of this Agreement that would not be otherwise available. The cases of legal entities not having bona fide business activities shall be covered by this Article. However, the ITAT held that the main purpose of incorporation was not to obtain benefits which would have otherwise not been available and in any case since the Indo-German treaty had similar provisions as regards taxation of shipping income, the test of LoB could not be invoked.

While examining the PoEM in ADIT (IT)-3(2), Mumbai v. Bay Lines (Mauritius)¹² the ITAT held that in order to invoke the treaty, the PoEM must be in either one of the Contracting States. In the instant case, the assessee was incorporated in Mauritius but shareholders and two directors were in UAE though there were two directors in Mauritius also. The meetings were held in UAE. Hence, it was held that where PoEM was not in India or in Mauritius, Article 8 of the India-Mauritius DTAA could not be invoked.

The MLI also advocates use of PoEM to determine residency of person other than individuals and the same has been incorporated in the OECD as well as UN Models.
Article 4(3) of the OECD MTC is reproduced below:

“3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, the competent authorities of the Contracting States shall endeavour to determine by mutual agreement the Contracting State of which such person shall be deemed to be a resident for the purposes of the Convention, having regard to its place of effective management, the place where it is incorporated or otherwise constituted and any other relevant factors. In the absence of such agreement, such person shall not be entitled to any relief or exemption from tax provided by this Convention except to the extent and in such manner as may be agreed upon by the competent authorities of the Contracting States.”

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