Comment on the following independent situations, whether P.C. Ltd. (domestic company) and R.D. Ltd. (incorporated in UK) constitute "associated enterprises" under the provisions of section 92A of Income Tax Act, 1961: (i

(i) P.C. Ltd and R.D. Ltd. are not associated enterprises: Under section 92A of the Income tax Act, 1961, two enterprises are deemed to be associated enterprise if loan advanced by one enterprise to another enterprise constitutes not less than 51% of book value of total assets. Here R.D. Ltd and A Ltd. as well as A Ltd. and PC Ltd. are associated enterprises, but P.C. Ltd and R.D. Ltd are not associated enterprises because under this clause, R.D. Ltd has not directly given loan to P.C. Ltd. Hence, they do not qualify as associated enterprises.