This article analyses the Morgan Stanley case, in which the Supreme Court of India examined treaty provisions that impact transfer pricing legislation in determining whether Morgan Stanley Advantages Service was an Indian permanent establishment of Morgan Stanley and Company, and whether stewardship activities and employees on secondment give rise to a services permanent establishment in India. The case also considers whether further profit is to be attributed to the permanent establishment where a transaction is arm's length. Relevant provisions of the Income Tax Act, the India-United States income tax treaty and the UN Model Treaty are also analysed.