While determining the tax liability of a non-resident taxpayer, the provisions of the Act or the DTAA, whichever are more beneficial shall apply [Sec 90(2)] .Generally, article 7 (Business Profits) of India’s DTAAs provides that a non-resident enterprise is not liable to pay any income-tax on its business profits from India unless. It has a “PE” in India and the profits are attributable to such “PE” the profits are attributable to such “PE”. Existence of PE also enables Source State to tax, dividends, interest and royalties that are effectively connected / attributable to such PE. Gains on alienation of moveable property forming part of PE can also be taxed “PE" has been referred to in the definition of "enterprise" in section 92F(iii) of the Act by the Finance Act, 2001 and subsequently in Section 44DA of the Act .CBDT circular clarifying Finance Act 2001 stated that the term be understood with reference to India’s DTAAs The term PE thereafter defined by section 92F(iiia) by the Finance Act 2002 w.e.f. 01.04.2002 to include –“a fixed place of business through which the business of the enterprise is wholly or partly carried on”. However, there are various types of PE under the tax treaties which makes definition of PE under tax. However, there are various types of PE under the tax treaties which makes definition of PE under tax treaties more specific, narrower in scope and beneficial than BC under the Act.