For determination of income attributable to a permanent establishment (PE), ‘Indirect method’ is an accepted approach when the PE does not maintain reliable books of account. In India, in such situations, Rule 10 of the Indian Income Tax Rules, 1962 (“the Rules”) should apply.

Rule 10 prescribes the following three methods for calculating income accruing or arising to a non-resident in India in cases where such income cannot be definitely ascertained:

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