The residential status of LO in India of an enterprise outside India is that of a “non-resident” for Indian tax purposes. Since the LO is not taxable in India as they do not indulge in income generating activities, transfer pricing provisions are not applicable for LO. However, if a LO constitutes a PE in India, it will be subject to tax in India and will be subject to an appropriate attribution of profit generated by the foreign enterprise from its operations in India.