The concept domestic territory is based on production unit located within economic territory. or we can say that within geographic boundary.

Introduction:
Indian companies that are situated in foreign countries are not covered under the domestic territory of India due to various legal, jurisdictional, and economic reasons. These companies operate in foreign jurisdictions and are subject to the laws of those countries. In this response, we will explore the reasons why Indian companies located abroad are not considered part of India's domestic territory.

Legal Jurisdiction:
- Indian companies operating in foreign countries are incorporated under the laws and regulations of those countries. They are treated as separate legal entities in the foreign jurisdiction.
- These companies are subject to the laws and regulations of the host country, including taxation, labor laws, and corporate governance requirements.
- Indian laws, such as the Companies Act and other regulatory frameworks, are generally applicable only within the territorial boundaries of India.

Double Taxation Avoidance Agreements (DTAAs):
- India has entered into Double Taxation Avoidance Agreements with several countries to prevent the same income from being taxed twice.
- DTAAs determine the taxability of income earned by Indian companies in foreign jurisdictions. The income of these companies is generally taxed in the country of residence and may be exempt or subject to reduced tax rates in India.
- As per the DTAAs, the foreign country has the primary right to tax the income of Indian companies situated there, and India has limited taxing rights over such income.

Territorial Principle of Taxation:
- The territorial principle of taxation is followed by most countries, including India. This principle states that a country can tax income that is generated within its territorial boundaries.
- Indian companies located abroad primarily generate income in the foreign jurisdiction and not within India's territorial boundaries. Hence, India's taxing rights are limited to specific types of income, such as income from business operations in India or income remitted to India.

Economic Considerations:
- Indian companies operating abroad contribute to the economic growth of the host country by creating employment, generating revenue, and promoting trade.
- These companies may receive various benefits and incentives from the host country to attract foreign investment and stimulate economic development.
- Treating foreign-based Indian companies as part of India's domestic territory could create complications in terms of legal jurisdiction, taxation, and compliance with both Indian and foreign laws.

Conclusion:
In conclusion, Indian companies situated in foreign countries are not covered under the domestic territory of India due to legal jurisdiction, double taxation avoidance agreements, the territorial principle of taxation, and economic considerations. These companies operate under the laws of the host country and are subject to taxation and regulations in that jurisdiction. Recognizing the separate legal status of these companies is essential to maintain clarity and avoid conflicts between different legal systems.