The Indian Authority for Advance Rulings (AAR) delivered a ruling dated 16 February 2006 in the case of Morgan Stanley and Co., United States (the Applicant) wherein it has been held that the Applicant's captive business process outsourcing (BPO) in India was not its permanent establishment (PE) under Art. 5 of the India-US tax treaty (the tax treaty). Hence, the income would not be taxable in India. (a) Facts. The Applicant was a non-resident entity incorporated and tax resident in the US. It provided financial advisory services, corporate lending and securities underwriting services. Morgan Stanley Advantage Services Private Limited (MSAS)...