Analyze the following situations and find out whether the entities are deemed associated enterprises or not: (i) A Inc., an American Company has a total loan of 20 lakh dollars with United Bank of America. Out of that B

Deemed Associated Enterprises (Section 92A(2) of Income-tax Act, 1961): (i) A Inc. and B Ltd. (Loan Guarantee): As per Section 92A(2)(d) of the Income-tax Act, 1961, two enterprises shall be deemed to be associated enterprises if one enterprise guarantees not less than 10% of the total borrowings of the other enterprise. In this case, A Inc. has a total loan of 20 lakh dollars. B Ltd. has guaranteed 1.6 lakh dollars of this loan. Percentage of loan guaranteed by B Ltd. = (1.6 lakh dollars / 20 lakh dollars) x 100 = 8%. Since B Ltd. guarantees only 8% of the total borrowings of A Inc., which is less than the 10% threshold specified in Section 92A(2)(d), B Ltd. and A Inc. are not deemed associated enterprises under this clause.