New Delhi, Oct. 21 -- Foreign-owned companies can now be treated as carrying on business in India even without active contracts, a physical office, and employees, the Supreme Court recently ruled, providing clarity for foreign firms with project-based or intermittent operations.

The judgment, delivered on 17 October by a bench of Justices Manoj Misra and Joymalya Bagchi, clarified that a temporary lull in business does not amount to cessation. What matters is whether there is a continuing business connection and demonstrable intent to operate in India.

The ruling allows non-resident entities to claim tax deductions, carry forward unabsorbed depreciation, and set off losses during periods of inactivity.

The ruling came in a case involvi...