Comment on the following independent situations, whether Jack Ltd. and Jill Inc. constitute associated enterprises under the provisions of Section 92A of the Income Tax Act, 1961: (ii) Jack Ltd. is engaged in trading of

As per section 92A of the Income-tax Act, 1961, two enterprises are deemed to be associated enterprises, if at any time during the previous year, 90% or more of the raw material required for the manufacture or processing of goods carried out by one enterprise, are supplied by the other enterprise. This clause is applicable only if the purchasing enterprise is engaged in manufacturing or processing of goods. In this case, Jack Ltd. is not engaged in manufacturing or processing of goods and hence, Jack Ltd. and Jill Inc. do not qualify as Associated Enterprises. Therefore, Jack Ltd. and Jill Inc. are not Associated Enterprise.